To increase liquidity in the hands of the common man and battle covid-induced financial distress, the government announced various relief measures on May 13, 2020. Among them was a reduction in the tax deducted at source (TDS) and tax collected at source (TCS) rates by 25 per cent on non-salaried payments. Non-salaried payments include interest earned on fixed deposits (FDs), dividend income etc (for various payments, the TDS itself kicks in at different levels).
The new rates will come into effect from May 14, 2020 and will remain effective till March 31, 2021, i.e., till the end of the financial year 2020-21, the finance minister Nirmala Sitharaman stated in her press briefing yesterday. From today till March 31, 2021, for any non-salaried income which is subject to TDS, the tax will now be deducted at the new reduced rates.
Here is a look at the reduced rates of TDS and TCS on various non-salaried payments.
New TDS, TCS rates
TDS on fixed deposit interest paid by a bank will now be deducted at 7.5 per cent instead of 10 per cent earlier. Similarly, a tenant will be required to deduct the TDS on rent exceeding Rs 50,000 per month at 3.75 per cent instead of 5 per cent earlier.
Abhishek Soni, CEO and founder, Tax2win.in says, “As per the various relief measures announced by FM, reduced rates of TDS and TCS will be applicable from May 14, 2020. Thus, where the transactions are entered and payments is due till May 13, 2020, old rate of TDS and TCS will be applicable and all the transactions which will be entered on after May 14, 2020 reduced rate of TDS and TCS will be applicable.” Read Original Post