TDS Rates for non-salary payments and TCS Rates for specified receipts have been reduced by 25% in respect of the remaining period of Financial Year 2020-21 (i.e. during 14th May 2020 to 31st March 2021), as a measure to inject liquidity of Rs. 50,000 crore in the System, as per Special Package of Rs 20 lakh crores (COVID-19) announced by Govt. of India on 13th May 2020.
It may be noted that there is no change in TDS/ TCS rates in certain circumstances, as under:
a) Payment of Salary/ Provident Fund u/s 192 or 192A;
b) Payments other than for contract, professional fees, interest, rent, dividend, commission or brokerage.
c) Disbursement of Lottery income, payment of consideration for purchase of immovable property, etc.
d) Payments to a non-resident person
e) Payments where a resident person fails to furnish PAN or Aadhaar. In such cases tax shall be
deductible at higher rate as specified u/s 206AA or 206CC, as may be applicable.
Rs 50,000 crores liquidity through TDS/ TCS rate reduction
In order to provide more funds at the disposal of the taxpayers, the rates of Tax Deduction at Source (TDS) for non-salaried specified payments made to residents and rates of Tax Collection at Source (TCS) for the specified receipts shall be reduced by 25% of the existing rates.
Payment for contract, professional fees, interest, rent, dividend, commission, brokerage, etc. shall be eligible for this reduced rate of TDS.
This reduction shall be applicable for the remaining part of the FY 2020-21 i.e. from tomorrow to 31st March, 2021.
This measure will release Liquidity of Rs. 50,000 crore.