Income Tax announcement by Finance Minister Nirmala Sitharaman: FM Makes big announcements under COVID-19 shadow
Clarification on TDS, TCS cut: The government today clarified the decision on TDS, TCS cuts announced yesterday. In a press conference today, Ajay Bhushan Pandey, Revenue Secretary, said that TDS has been cut on 23 items such as securities, bank accounts, securities, payments to professionals etc. Also, TCS on 12 items have been cut. He said that the rates at which TDS and TCS were cut on various transactions have been reduced by 25 per cent. This has been done so that more money is left at the disposal of the people.
The CBDT has also notified various rates for TDS and TCS. As per the notification, no reduction in rates of TDS or TCS will be available where the tax is required to be deducted or collected at a higher rate due to the non-furnishing of PAN/Aadhaar.
On Wednesday, Finance Minister Nirmala Sitharaman had made the announcement of a reduction in the rate of tax deducted at source (TDS) and tax collected at source (TCS) for non-salaried payments. Today, the Central Board of Direct Taxes (CBDT) notified revised rates that will be applicable from May 14, 2020, to March 31, 2021. Sitharaman had announced a slew of measures to help companies and taxpayers tide over hardships caused by coronavirus lockdown. She had stated that the reduction in TDS/TCS rate would release about Rs 50,000 crore in the hands of people.
CBDT Notification: Where you have to pay less TDS, TCS
- The CBDT today said that tax deducted on payment of dividend, insurance policy, rent, professional fee and on the acquisition of immovable property has been cut by 25 per cent for a period up to March 31.
- TCS on sale of the motor vehicle above Rs 10 lakh has been cut to 0.75 per cent from 1 per cent earlier, TDS on 23 items has been reduced.
- TDS on payment for life insurance policy has been reduced to 3.75 per cent from 5 per cent
- On Dividend and interest as well as rent for immovable property has been cut to 7.5 per cent from 10 per cent earlier.
- The 1 per cent TDS charged on payment made for the acquisition of immovable property has now been reduced to 0.75 per cent. Payment of rent by individual or HUF has been cut to 3.75 per cent from 5 per cent earlier.
- TDS on e-commerce participants has also been reduced to 0.75 per cent from 1 pr cent.
- Tax on professional fee has been reduced to 1.5 per cent from 2 per cent.
- TDS on payments in respect of deposits under National Savings Scheme has been reduced to 7.5 per cent from 10 per cent and
- TDS on payments for re-purchase of units by Mutual Funds to 15 per cent from 20 per cent.
- TDS on insurance commission and brokerage have been cut to 3.75 per cent from 5 per cent.
- TDS on payment of dividend by mutual funds has been reduced to 7.5 per cent from 10 per cent.
- TCS on sale of tendu leaves, scrap, timber, forest produce, and minerals such as coal, lignite or iron ore has also been reduced.
- No reduction in rates of TDS or TCS where the tax is required to be deducted or collected at a higher rate due to the non-furnishing of PAN/Aadhaar.