Prime Minister, Narendra Modi’s 12th May speech promised a Rs 20 lakh crore package. This package intends to help the working class of the country. Finance Minister, Nirmala Sitharaman, detailed the processing of this relief package for different sectors. One part of it will help revive the business and MSMEs. While another part of this relief fund will help individuals with income tax and TDS. This article discusses the new measures for income tax and TDS relaxation amid the coronavirus lockdown.
TDS and TCS Rates Reduction
- TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) will see changes from 14th May 2020.
- The TDS rates for non-salaried individuals made to residents and TCS rates for the specified receipts will see a reduction of 25% of the current rates.
- This TDS and TCS rate reduction is only applicable to non-salaried individuals and companies. For instance, payment of contract, professional fees, interest, dividend, commission, brokerage, etc. are eligible.
- The revised TDS and TCS rates will be applicable from 14 May 2020 to 31st March 2021.
- This measure will release liquidity of Rs 50,000 crore.
Revised TDS/TCS rates
| Nature of Payment | Basic Cut off (Rs.) | Individual /Company and others New Rate %) | Individual /Company and others (Old Rate %) | If No Pan or Invalid PAN (Rate %) |
| 192 – Salaries | Slab Rate | Slab Rates | Slab Rates | 30% |
| 192A- Premature withdrawal from Employee Provident Fund | 50000 | Individual: 7.5% Company: NA | Individual: 10% Company: NA | 20% |
| 193 – Interest on securities | – | Individual: 7.5% Company: 7.5% | Individual: 10% Company: 10%` | 20% |
| 194 – Dividend other than the dividend as referred to in Section 115-O | 2500 | Individual: 7.5% Company: 7.5% | Individual: 10% Company: 10% | 20% |
| 194A – Interest other than interest on securities – Others | 40000 (for individual) | Individual: 7.5% | Individual: 10% Company: 10% | 20% |
| 194A – Banks (Time deposits) | 40000 (for individual) 50000 (for Senior Citizens only) | Company: 7.5% | Individual: 10% Company: 10% | 20% |
| 194A – Banks (Recurring deposit) | 40000 (for individual) 50000(for Senior Citizens only) | Individual: 7.5% | Individual: 10% Company: 10% | 20% |
| 194A – Deposit in Co-op Banks | 40000 (for individual) 50000(for Senior Citizens only) | Company: 7.5% | Individual: 10% Company: 10% | 20% |
| 194B – Winning from Lotteries | 10000 | Individual: 22.5% Company: 22.5% | Individual: 30% Company: 30% | 30% |
| 194BB – Winnings from Horse Race | 10000 | Individual: 22.5% Company: 22.5% | Individual: 30% Company: 30% | 30% |
| 194C- Payment to Contractor – Single Transaction | 30000 | Individual: 0.75% Company: 1.5% | Individual: 1% Company: 2% | 20% |
| 194C-Payment to Contractor – Aggregate During the Financial year | 100000 | Individual: 0.75% Company: 1.5% | Individual: 1% Company: 2% | 20% |
| 194C- Contract – Transporter not covered under 44AE | 30000 / 75000 | Individual: 0.75% Company: 1.5% | Individual: 1% Company: 2% | 20% |
| 194C- Contract – Transporter covered under 44AE & submit declaration on prescribed form with PAN | – | – | – | 20% |
| 194D – Insurance Commission | 15000 | Individual: 3.75% Company: 3.75% | Individual: 5% Company: 5% | 20% |
| 194DA Payment in respect of life insurance policy | 100000 | Individual: 0.75% Company: 0.75% | Individual: 1% Company: 1% | 20% |
| 194E – Payment to Non-Resident Sportsmen or Sports Association | – | Individual: 15% Company: 15% | Individual: 20% Company: 20% | 20% |
| 194EE – Payments out of deposits under National Savings Scheme | 2500 | Individual: 7.5% Company: 7.5% | Individual: 10% Company: 10% | 20% |
| 194F – Repurchase Units by MFs | – | Individual: 15% Company: 15% | Individual: 20% Company: 20% | 20% |
| 194G – Commission – Lottery | 15000 | Individual: 3.75% Company: 3.75% | Individual: 5% Company: 5% | 20% |
| 194H – Commission / Brokerage | 15000 | Individual: 3.75% Company: 3.75% | Individual: 5% Company: 5% | 20% |
| 194I – Rent – Land and Building – furniture – fittings | 240000 | Individual: 7.5% Company: 7.5% | Individual: 10% Company: 10% | 20% |
| 194I – Rent – Plant / Machinery / equipment | 240,000 | Individual: 1.5% Company: 1.5% | Individual: 2% Company: 2% | 20% |
| 194IA -Transfer of certain immovable property other than agriculture land | 50,00,000 | Individual: 0.75% Company: 0.75% | Individual: 1% Company: 1% | 20% |
| 194IB – Rent – Land or building or both | 50000 per month | Individual: 3.75% | Individual: 5% | 20% |
| 194IC – Payment of Monetary consideration under Joint development agreement | – | Individual: 7.5% Company: 7.5% | Individual: 10% Company: 10% | 20% |
| 194J – Professional Fees for technical services (w.e.f. from 1.4.2020) | 30000 | Individual: 1.5% Company: 1.5% | Individual: 2% Company: 2% | 20% |
| 194J – Professional Fees in all other cases | 30000 | Individual: 7.5% Company: 7.5% | Individual: 10% Company: 10% | 20% |
| 194K- Payment of any income in respect of Units of Mutual fund as per section 10(23D) or Units of administrator or from a specified company | – | Individual: 7.5% Company: 7.5% | Individual: 10% Company: 10% | 20% |
| 194LA – TDS on compensation for compulsory acquisition of immovable Property | 250000 | Individual: 7.5% Company: 7.5% | Individual: 10% Company: 10% | 20% |
| 194 LBA (1)- Business trust shall deduct tax while distributing, any interest received or receivable by it from a SPV or any income received from renting or leasing or letting out any real estate asset owned directly by it, to its unit holders. | Individual: 7.5% Company: 7.5% | Individual: 10% Company: 10% | 20% | |
| 194LB – Income by way of interest from infrastructure debt fund (non-resident) | – | Individual: 3.75% Company: 3.75% | Individual: 5% Company: 5% | 20% |
| 194LBB – Income in respect of investment in Securitisation trust. | – | Individual: 7.5% Company: 22.5% | Individual: 10% Company: 30% | 30% |
| 194LBC- Income in respect of investment made in a securitisation trust | – | Individual: 18.75% Company: 22.5% | Individual: 25% Company: 30% | 30% |
| 194 LC – Income by way of interest by an Indian specified company to a non-resident / foreign company on foreign currency approved loan / long-term infrastructure bonds from outside India | – | Individual: 3.75% Company: 3.75% | Individual: 5% Company: 5% | 20% |
| 194LD – Interest on certain bonds and govt. Securities | – | Individual: 3.75% Company: 3.75% | Individual: 5% Company: 5% | 20% |
| 194M – Payment of Commission, brokerage, contractual fee, professional fee to a resident person by an individual or a HUF who are not liable to deduct TDS under section 194C, 194H, or 194J. | 50,00,000 | Individual: 3.75% Company: 3.75% | Individual: 5% Company: 5% | 20% |
| 194N – Cash withdrawal in excess of Rs. 20 Lakh during the previous year from one or more account maintained by a person with a banking company, co-operative society engaged in business of banking or a post office. | 20,00,000 | Individual: 1.5% Company: 1.5% | Individual: 2% Company: 2% | 20% |
| 194N – Cash withdrawal in excess of Rs. 1 crore during the previous year from one or more account maintained by a person with a banking company,co-operative society engaged in business of banking or a post office. | 100,00,000 | Individual: 1.5% Company: 1.5% | Individual: 2% Company: 2% | 20% |
| 194O- Applicable for E-Commerce operator for sale of goods or provision of service facilitated by it through its digital or electronic facility or platform. | – | Individual: 0.75% Company: 0.75% | Individual: 1% Company: 1% | 20% |
| 195- Payment of any sum to Non-resident | – | – | – | Higher of Rate in force or Double Taxation Avoidance Act rate |
| 196B – Income from units | – | Individual: 7.5% Company: 7.5% | Individual: 10% Company: 10% | 20% |
| 196C-Income from foreign currency bonds or GDR (including long-term capital gains on transfer of such bonds) (not being dividend) | – | Individual: 7.5% Company: 7.5% | Individual: 10% Company: 10% | 20% |
| 196D – Income of FIIs from securities | – | Individual: 15% Company: 15% | Individual: 20% Company: 20% | 20% |
The TDS on e-commerce participants under Section 194-0 is 1.0% for the duration of 1st April 2020 to 13th May 2020. Furthermore, it will be 0.75% from 14th May 2020 to 31st March 2021.
Thus, the TDS on the amount paid/credited from 14th May 2020 to 31st March 2021 shall be deducted at the reduced new rates, as given in the table above. Similarly, the tax on the amount received/debited from 14th May 2020 to 31st March 2021 shall be collected at new rates as specified in the table above.
In the case where there is no PAN card available, tax is required to be deducted at higher rates. The TDS rates are not reduced due to non-furnishing of PAN or Aadhaar Card.
Due dates for TDS quarterly returns
| Quarter | Period | Due Date |
| Q1 | 1 April 2020 – 30 June 2020 | 31st July 2020 |
| Q2 | 1 July 2020 – 30 September 2020 | 31st October 2020 |
| Q3 | 1 October 2020 – 31 December 2020 | 31st January 2020 |
| Q4 | 1 January 2020 – 31 March 2021 | 31st May 2021 |
Due dates for TDS payment
| Month | Due date for Government deductors | Due date for other deductors (Company, Individual, HUF etc) |
| April | 7th May 2020 | 7th May 2020 |
| May | 7th June 2020 | 7th June 2020 |
| June | 7th July 2020 | 7th July 2020 |
| July | 7th August 2020 | 7th August 2020 |
| August | 7th September 2020 | 7th September 2020 |
| September | 7th October 2020 | 7th October 2020 |
| October | 7th November 2020 | 7th November 2020 |
| November | 7th December 2020 | 7th December 2020 |
| December | 7th January 2021 | 7th January 2021 |
| January | 7th February 2021 | 7th February 2021 |
| February | 7th March 2021 | 7th March 2021 |
| March | 7th April 2021 | 30th April 2021 |
Interest on late payment and late deduction of TDS
As per section 201(1A), interest at the rate of 1% per month or part of the month on amount of TDS from the date of tax was deductible till the date of tax actually deducted shall be charged for late deduction.
Also, for late payment, Interest at the rate of 1.5 % per month or part of the month on amount of TDS from the date of tax was deducted till the date such tax is paid shall be charged.
For delayed payments of advanced tax, self-assessment tax, regular tax, TDS, TCS, equalization levy, STT, CTT made between 20th March 2020 and 30th June 2020, reduced interest rate at 9% instead of 12 %/18 % per annum (i.e. 0.75% per month instead of 1/1.5% per month) will be charged for this period. No late fee/penalty shall be charged for delay relating to this period.
Tax Refunds
- The Income Tax department had earlier stated that refunds for below Rs 5 lakh will be fast-tracked.
- This has been fulfilled to benefit 14 lakh taxpayers already.
- Extension of this to all charitable trusts and noncorporate businesses professions including proprietorship, partnership, LLP and cooperatives will be issued immediately. They will also receive their tax refunds as soon as possible.
Due date extension: return and audit
| Particular | Current Due Date | New Due Date |
| Individual Tax Payer and Non Audited firm | 31st July 2020 | 30th November 2020 |
| Audited Taxpayer and Partners of Audited Firm | 31st October 2020 | 30th November 2020 |
| Tax audit under income tax | 30th September 2020 | 31st October 2020 |
A one month difference has been maintained between audit and return dates as usual.
Due date extension: Assessment and Vivad Se Vishwas scheme
- Date of assessments getting barred on 30th September 2020 has been extended to 31st December 2020. Similarly, those getting barred on 31st March 2021 will be extended to 30th September 2021.
- Thus, record-keeping for the last three to six months will be necessary for assessment.
- Period of Vivad Se Vishwas Scheme, for making tax payment without additional amount, will be extended to 31st December 2020. No interest or penalty will be charged.
Watch the detailed video on income tax and TDS relaxation below.
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