Tax Deducted at Source (TDS) is a mechanism that has been introduced by the Income Tax Department. Under this, the responsible person is supposed to deduct a certain percentage of income as tax before making the payment to the receiver. The payment includes salary, commission, professional fees, interest, rent, etc.
Due to Covid-19 situation, the rates of TDS on payments made to resident Indian has been reduced by 25% for the period starting from 14th May, 2020 to 31st March, 2021. However, there shall be no reduction in rates, where tax is required to be deducted or collected at higher rate due to non-furnishing of PAN/Aadhaar.
Now, let’s have a look at the TDS/TCS Rates applicable for financial year 2020-21 as per Press Release issued by Ministry of Finance dated 13th May, 2020:
TDS Rate Chart for F.Y. 2020-21 (A.Y: 2021-22)
| Section | Nature of payment | Threshold Limit | Applicable from 01/04/2020 to 13/05/2020 | Applicable from 14/05/2020 to 31/03/2021 | ||
| Resident | Non-resident * | Resident | Non-resident * | |||
| Rs. | TDS Rate (%) | TDS Rate (%) | TDS Rate (%) | TDS Rate (%) | ||
| 192 | Salaries | – | Normal slab rate | Normal slab rate | Normal slab rate | Normal slab rate |
| 192A | Premature withdrawal from EPF | 50000 | 10 | 10 | 10 | 10 |
| 193 | Interest on securities – 8% Savings (Taxable) Bonds, 2003 or 7.75% Savings (Taxable) Bonds, 2018 during the financial year | 10000 | 10 | – | 7.5 | – |
| 193 | Interest on securities – Interest on securities for money issued by or on behalf of any local authority/statutory corporation, listed debentures of a company(other than demat form), any other interest on securities | 5000 | 10 | – | 7.5 | – |
| 194 | Dividends | 5000 | 10 | – | 7.5 | – |
| 194A | Interest (Banking co., co-operative society engaged in banking, post office) | 40000 | 10 | – | 7.5 | – |
| 194A | Interest (Any other person) | 5000 | 10 | – | 7.5 | – |
| 194B | Winning from lotteries | 10000 | 30 | 30 | 30 | 30 |
| 194BB | Winning from Horse race | 10000 | 30 | 30 | 30 | 30 |
| 194C | Contractor-Single
transaction-Individual/HUF -Others |
30000 |
1 2 |
– – |
0.75 1.5 |
– – |
| 194C | Contractor – Consolidated Payment During the F.Y.
– Individual/HUF – Others |
100000 |
1 2 |
– – |
0.75 1.5 |
– – |
| 194D | Insurance commission
– Other than Company – Company |
15000 |
5 10 |
– – |
3.75 10 |
– – |
| 194DA | Maturity of Life insurance policy | 100000 | 5 | – | 3.75 | – |
| 194E | Non-resident sportsmen or sports association | – | – | 20 | – | 20 |
| 194EE | NSS | 2500 | 10 | 10 | 7.5 | 10 |
| 194F | Repurchase units by MFs | – | 20 | 20 | 15 | 20 |
| 194G | Commission-Lottery | 15000 | 5 | 5 | 3.75 | 5 |
| 194H | Commission/Brokerage | 15000 | 5 | – | 3.75 | – |
| 194I | Rent of – Plant/Machinery /Equipment
– Land and Building/Furniture & Fixture |
240000 | 2
10 |
–
– |
1.5
7.5 |
–
– |
| 194IA | Transfer of certain immovable property other than agriculture land | 50 lakh | 1 | – | 0.75 | – |
| 194IB | Rent by Individual/HUF | 50000 per month | 5 | – | 3.75 | – |
| 194IC | Payment under Joint Development Agreements to Individual/HUF | – | 10 | – | 7.5 | – |
| 194J | Professional Fees | 30000 | 10 | – | 7.5 | – |
| 194J | Technical Fees (w.e.f. 01.04.2020) | 30000 | 2 | – | 1.5 | – |
| 194J | Payment to call centre operator (w.e.f. 01.06.2017) | 30000 | 2 | – | 1.5 | – |
| 194J | Director’s fees | – | 10 | – | 7.5 | – |
| 194K | Payment of any income in respect of
(a) units of a mutual fund as per section 10(23D); or (b) the units from the administrator; or (c) units from specified company (w.e.f. 01.04.2020) |
5000 | 10 | – | 7.5 | – |
| 194LA | Compensation on transfer of certain immovable property other than agriculture land
(TDS exempted if covered under RFCTLARR Act w.e.f. 01.04.2017) |
250000 | 10 | – | 7.5 | – |
| 194LB | Income by way of interest from infrastructure debt fund | – | – | 5 | – | 5 |
| 194LBA | Income from units of business trust
– interest received or receivable from a special purpose vehicle; or – dividend referred to in sub-section (7) of section 115-O |
– |
10
10 |
5
10 |
7.5
7.5 |
5
10 |
| 194LBA | Distribution of rental income to unit holders
– Other than Comapany – Company |
– |
10 10 |
30 40 |
7.5 7.5 |
30 40 |
| 194LBB | Income in respect of units of investment fund
– Other than Company – Company |
– |
10 10 |
30 40 |
7.5 7.5 |
30 40 |
| 194LBC | Income in respect of investment in securitization fund
– Individual/HUF – Company – Other Person |
– |
25 30 30 |
30 40 30 |
18.75 22.5 22.5 |
30 40 30 |
| 194LC | 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 | – | – | 5 | – | 5 |
| 194LC | Income by way of interest by an Indian specified company on rupee denominated bond / any long-term bonds from outside India, which is listed only on a recognized stock exchange located in any International Financial Services Centre | – | – | 4 | – | 4 |
| 194LD | Interest on certain bonds from Govt. securities | – | – | 5 | – | 5 |
| 194M | Certain payments by Individual/HUF | 50 lakh | 5 | – | 3.75 | – |
| 194N | Payment of certain amount in cash | 1 Crore | 2 | 2 | 2 | 2 |
| 194N | Payment of certain amount in cash (first proviso of section 194N)if-
– Amount is more than Rs.20 lakh but up to Rs. 1 crore – Amount exceeds Rs. 1 crore (Applicable from 01.07.2020) |
N.A.
N.A. |
N.A.
N.A. |
2
5 |
2
5 |
|
| 194-O | Applicable for e-commerce operator for the sale of goods or provision of services facilitated by it through its digital or electronic facility or platform (Applicable from 01.10.2020) | – | N.A | – | 0.75 | – |
| 195 | Income of Investment made by an NRI | – | – | 20 | – | 20 |
| 195 | Long-term capital gain
– Under Section – 115E/ 112(1)(c)(iii)/112A – Any Other Gains |
– |
– – |
10 20 |
– – |
10 20 |
| 195 | Short-term capital gain – 111A | – | – | 15 | – | 15 |
| 195 | Royalty | – | – | 10 | – | 10 |
| 195 | Fees for technical services | – | – | 10 | – | 10 |
| 195 | Interest income payable by Govt./Indian concern (other than section 194LB or 194LC) | – | – | 20 | – | 20 |
| 195 | Any Other Income – Other than Company
– Company |
– | –
– |
30
40 |
–
– |
30
40 |
| 196A | Income in respect –
– of units of a Mutual Fund specified under clause (23D) of section 10; or – from the specified company referred to in the Explanation to clause (35) of section 10 |
– | – | 20 | – | 20 |
| 196B | Income from units to an offshore fund | – | – | 10 | – | 10 |
| 196C | Income from foreign currency bonds or GDR of an Indian company | – | – | 10 | – | 10 |
| 196D | Income of foreign Institutional Investors from securities (not being dividend or capital gain) | – | – | 20 | – | 20 |
* TDS rate shall be increased by applicable surcharge and Health & Education Cess.
Note: In case of non-furnishing of PAN/Aadhaar by deductee, TDS will be charged at normal rate or 20% (5% in case of section 194-O), whichever is higher.
TCS Rate Chart for F.Y. 2020-21 (A.Y: 2021-22)
| Section | Nature of payment | Applicable from 01/04/2020 to 13/05/2020
TCS Rate (%) |
Applicable from 14/05/2020 to 31/03/2021
TCS Rate (%) |
| 206C | Scrap | 1 | 0.75 |
| 206C | Tendu leaves | 5 | 3.75 |
| 206C | Timber obtained under a forest lease or other mode | 2.5 | 1.875 |
| 206C | Any other forest produce not being a timber or tendu leaves | 2.5 | 1.875 |
| 206C | Alcoholic liquor for human consumption and Indian made foreign liquor | 1 | 1 |
| 206C | Parking lot, toll plaza, mining and quarrying (other than mining and quarrying of mineral oil, petroleum and natural gas) | 2 | 1.5 |
| 206C | Minerals, being coal or lignite or iron ore | 1 | 0.75 |
| 206C | Sale of motor vehicle of the value exceeding Rs. 10 Lacs | 1 | 0.75 |
| 206C | Remittance out of India under the Liberalized Remittance Scheme of the RBI of the value exceeding 7 Lacs in a financial year (Applicable from 01.10.2020) – TCS will be charged on excess amount over 7 lacs | N.A. | 5 |
| 206C | Sale of overseas tour programme package (Applicable from 01.10.2020) | N.A. | 5 |
| 206C | Remittance out of India for education under the Liberalized Remittance Scheme of the RBI of the value exceeding 7 Lacs in a financial year (Applicable from 01.10.2020) – TCS will be charged on excess amount over 7 lacs | N.A. | 0.5 |
| 206C | Sale of any goods (other than goods exported out of India or goods given in the above points) of the value exceeding 50 Lacs (Applicable from 01.10.2020) – TCS will be charged on excess amount over 50 lacs | N.A. | 0.075 |
Note: In case of non-furnishing of PAN/Aadhaar by collectee, TCS will be charged at twice of the normal rate applicable or 5% {1% in case of sale of any goods (given in the last point) of the value exceeding 50 Lacs}, whichever is higher.