e-Filing 2.0
New Income Tax Filing Features
e-Filing 2.0
New Income Tax Filing Features
Divya Singhvi
2020-06-12 15:53:58TDS is nothing but an early collection of tax. It needs to be deducted on a specific payment at a prescribed rate by the payer/deductor. Deductor is a person who is liable to deduct TDS before making payment to a deductee. Let’s take a look at the TDS Rates for FY 2020-21. In this article, we take a closer look at the TDS rate chart.
Finance Minister confirms TDS Rates applicable for the coming Financial year in every Budget. During the year 2020, there was Covid-19 induced distress. In order to provide more funds at the disposal of the taxpayers for dealing with the economic situation, the government announced various relief measures on 13 May 2020 through a press release. One of them was a reduction in TDS Rates for FY 2020-21 on non-salaried payments.
The TDS Payments can be divided into 3 sections as TDS on:
As per Section 192 of the Income-tax Act, the employer needs to deduct TDS on salary payment. Employer/Deductor needs to deposit TDS deducted on salary before the 7th of the next month (30th April for the month of March). The employer has to file TDS Return in FORM 24Q.
TDS on payments other than Salary depends upon the nature of Payment. Some common payments which feature the TDS system of taxation include commission, FD interest, rent, etc. TDS on different payments and their applicable rates are notified by the Income Tax Act, 1961. For payments other than salary deductor has to file TDS Return Form 26Q.
In a press release, Finance Minister Nirmala Sitharam as part of the Covid-19 package to revive the economy declared that the TDS rates for all non-salaried payment to residents, and TCS rates will be slashed by 25 percent of the specified rates for the remaining period of FY 2020-21. These rates shall be applicable for the period starting from 14th May 2020 to 31st March 2021.
Given below is the TDS rate chart:
Section |
Nature of Payment |
Threshold Limit (INR) |
Existing Rates |
TDS Rates From 14/05/2020 to 31-03-2021 |
| 193 | Interest on Securities | 5000 | 10% | 7.5% |
| 194 | Dividend | 2500 | 10% | 7.5% |
| 194A | Interest other than Interest on Securities | 5000 | 10% | 7..5% |
| 194C | Payment of contractors and sub-contractors | 100000 | 1% | 0.75% |
| 194D | Insurance Commission | 15000 | 5% | 3.75% |
| 194DA | Payment in respect of Life Insurance Policy | 100000 | 1% | 0.75% |
| 194EE | Payments in respect of deposits under National Savings Scheme |
2500 | 10% | 7.5% |
| 194F | Payments on account of re-purchase of Units by Mutual Funds or UTI |
– | 20% | 15% |
| 194G | Commission, prize, etc. on sale of lottery tickets | 15000 | 5% | 3.75% |
| 194H | Commission or brokerage | 15000 | 5% | 3.75% |
| 194-I(a) | Rent for Plant and Machinery | 240000 | 2% | 1.5% |
| 194-I(b) | Rent for immovable property | 240000 | 10% | 7.5% |
| 194-IA | Payment for acquisition of immovable property | 5000000 | 1% | 0.75% |
| 194-IB | Payment of Rent | 180000 | 5% | 3.75% |
| 194-IC | Payment for Joint Development Agreements | – | 10% | 7.5% |
| 194J | Fee for Professional or Technical Services (FTS), Royalty, etc. |
30000 | 2% (FTS, certain royalties, call center) 10% (others) |
1.5% (FTS, certain royalties, call center) 7.5% (others) |
| 194K | Payment of Dividend by Mutual Funds | 5000 | 10% | 7.5% |
| 194LA | Payment of compensation on acquisition of immovable property |
250000 |
10% | 7.5% |
| 194LBA(1) | Payment of income by business trust | – | 10% | 7.5% |
| 194LBB(i) | Payment of income by investment fund | – | 10% | 7.5% |
| 194LBC(1) | Income by Securitisation Fund | – | 25% | 18.75% |
| 194M | Payment to commission, brokerage etc. by Individual/HUF |
– | 5% | 3.75% |
| 194-O | TDS on e-commerce participants |
– |
1% (w.e.f 01-10-2020) |
0.75% |
Note: No Reduction in rate of TDS where the tax is required to be deducted at higher rate due to non furnishing of PAN.
Section |
Nature of Payment |
Threshold Limit (INR) |
Existing Rates |
TDS Rates From 14/05/2020 to 31-03-2021 |
| 193 | Interest on Securities | 5000 | 10% | 7.5% |
| 194 | Dividend | 2500 | 10% | 7.5% |
| 194A | Interest other than Interest on Securities | 5000 | 10% | 7..5% |
| 194C | Payment of contractors and sub-contractors | 100000 | 2% | 1.5% |
| 194D | Insurance Commission | 15000 | 5% | 3.75% |
| 194DA | Payment in respect of Life Insurance Policy | 100000 | 1% | 0.75% |
| 194EE | Payments in respect of deposits under National Savings Scheme |
2500 | 10% | 7.5% |
| 194F | Payments on account of re-purchase of Units by Mutual Funds or UTI |
– | 20% | 15% |
| 194G | Commission, prize, etc. on sale of lottery tickets | 15000 | 5% | 3.75% |
| 194H | Commission or brokerage | 15000 | 5% | 3.75% |
| 194-I(a) | Rent for Plant and Machinery | 240000 | 2% | 1.5% |
| 194-I(b) | Rent for immovable property | 240000 | 10% | 7.5% |
| 194-IA | Payment for acquisition of immovable property | 5000000 | 1% | 0.75% |
| 194-IB | Payment of Rent | 180000 | 5% | 3.75% |
| 194-IC | Payment for Joint Development Agreements | – | 10% | 7.5% |
| 194J | Fee for Professional or Technical Services (FTS), Royalty, etc. |
30000 | 2% (FTS, certain royalties, call center) 10% (others) |
1.5% (FTS, certain royalties, call center) 7.5% (others) |
| 194K | Payment of Dividend by Mutual Funds | 5000 | 10% | 7.5% |
| 194LA | Payment of compensation on acquisition of immovable property |
250000 |
10% | 7.5% |
| 194LBA(1) | Payment of income by business trust | – | 10% | 7.5% |
| 194LBB(i) | Payment of income by investment fund | – | 10% | 7.5% |
| 194LBC(1) | Income by Securitisation Fund | – | 30% | 22.5% |
| 194M | Payment to commission, brokerage etc. by Individual/HUF |
– | 5% | 3.75% |
| 194-O | TDS on e-commerce participants |
– |
1% (w.e.f 01-10-2020) |
0.75% |
The below table consists of the TCS rate charts from AY 2020-21 and 2021-22. The Finance Minister has made various changes in TDS provisions in the Finance Act, 2020. She also introduced two new sub-section such as section 206C(1G) and 206C(1H) which provides TCS on foreign remittance through Liberalised Remittance Scheme (LRS) and on selling of overseas tour package TDS as well as TCS on sale of goods over a limit.
| Section | Particulars | TCS Rates (AY 2020-21) | TCS Rates (Upto 13th May, 2020) | TCS Rates (From 14th May, 2020 to 31st March, 2021) |
| 206C(1) | Sale of the following: | |||
| a) Alcoholic Liquor for Human Consumption | 1% | 1% | 1% (No Change) | |
| b) Tendu leaves | 5% | 5% | 3.75% | |
| c) Timber obtained under a forest lease | 2.5% | 2.5% | 1.875% | |
| d) Timber obtained by any mode other than under a forest lease | 2.5% | 2.5% | 1.875% | |
| e) Any other forest produce not being timber or tendu leaves | 2.5% | 2.5% | 1.875% | |
| f) Scrap | 1% | 1% | 0.75% | |
| g) Minerals, being coal or lignite or iron ore | 1% | 1% | 0.75% | |
| 206C(1C) | Grant of lease or license of the following: | |||
| a) Parking lot | 2% | 2% | 1.5% | |
| b) Toll Plaza | 2% | 2% | 1.5% | |
| c) Mining and quarrying (Other than mining and quarrying of mineral oil, petroleum and natural gas) | 2% | 2% | 1.5% | |
| 206C(1F) | Sale of the motor vehicle of the value exceeding Rs. 10 lakh whether payment is received by cheque or by any other mode | 1% | 1% | 0.75% |
| 206C(1G)(a) | TCS on foreign remittance through Liberalised Remittance Scheme (LRS)
(This Section is inserted by Finance Act, 2020 which is proposed to be applicable from 01/10/2020) (Please refer Note 1 for in depth explanation of this new section) |
NA | 0.5%: Where remittance is a repayment of loan obtained for the purpose of pursuing any education.5% In any other case.(wef 01.10.2020)
(10% for non PAN or Aadhaar cases) (W.e.f. 01/10/2020) |
0.5%: Where remittance is a repayment of loan obtained for the purpose of pursuing any education.5% In any other case.(wef 01.10.2020)
(10% for non PAN or Aadhaar cases) (W.e.f. 01/10/2020) |
| 206C(1G)(b) | TCS on selling of overseas tour package
(This Section is inserted by Finance Act, 2020 which is proposed to be applicable from 01/10/2020) (Please refer Note 2 for in depth explanation of this new section) |
NA | 5%
(10% for non PAN or Aadhaar cases) (W.e.f. 01/10/2020) |
5%
(10% for non PAN or Aadhaar cases) (W.e.f. 01/10/2020) |
| 206C(1H) | TCS on sale of any goods [except goods on which TCS applicable as per Section 206C (1), 206C (1F) and 206C (1G)]
(This Section is inserted by Finance Act, 2020 which is proposed to be applicable from 01/10/2020) (Please refer Note 3 for in depth explanation of this new section) |
NA | 0.10%
(1% for non PAN or Aadhaar cases) (W.e.f. 01/10/2020) |
0.075%
(1% for non PAN or Aadhaar cases) (W.e.f. 01/10/2020) |
Tds u/s 195 is deducted on payments to be made to Non-Resident. There is no threshold limit under section 195 of the Income Tax Act, hence TDS will be deducted from the entire income/amount. TDS shall be deducted at the time of making payment. Form 27Q is required to be submitted on quarterly basis on or before the due date on payments other than salary made to NRI.
Due to Covid-19, there has been a reduction in TDS Rates. However, there has been no reduction in the TDS Rates of Section 195. Therefore, TDS u/s 195 shall be deducted at the same existing rates.
As per section 206AA, if you do not furnish your Permanent Account Number to the payer (i.e., deductor), then the deductor shall deduct tax from whichever is the higher of the following, i.e, at the rate of 20%, or the rates specified in the relevant provision of the act or rates in force or the prescribed in the Finance Act.
To know the quantum of the tax deducted by the payer, you can ask the payer to furnish you a TDS certificate in respect of tax deducted by him. You can also check Form 26AS from your e-filing account on Income Tax Portal.
You can also use the “View Your Tax Credit” facility available at www.incometaxindia.gov.in
It is the duty and responsibility of the payer to deduct tax at source. Therefore, if the payer fails to deduct tax at source, penalty is levied for not depositing or not deducting TDS on time. However, the employer can make the interest payment on such late payment of TDS before filing TDS returns or demand raised by TRACES.
Hey @ViraajAhuja47
TDS and TCS both come under Income Tax.
TDS: Tax Deducted at Source
TDS is a taxation method, where a person making a payment of specific nature is liable to deduct tax and deposit it with the government.
The rate at which TDS is deducted and paid is based on the specified based on nature of the payment.
The person making the payment is required to make deduct and deposit the TDS.
TCS: Tax Collected at Source
TCS is collected by the seller from the buyer at the time of sale made. Sellers selling any specified item are liable to collect tax at a predefined rate from the buyer the time of making a sale. This TCS collected has to be deposited by the seller with the government.
Hope this helps!