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Changes in TDS rates as per Finance Act 2020

Parth Shah 
on 13 May 2020

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In Budget 2020, Government has made various amendment either changes in existing TDS/TCS Rates or addendum new TDS/TCS Rates, A.Y 2021-22

TDS Rates Chart (Specific to Changes in Budget)

Changes in Existing Rate

   

Sr.No

Nature of Payment

Section

Limit

TDS Rate for

Ind. and HUF

Other than Ind. and HUF

If PAN Not Available

1

Salary Payment

192

Slab rate

Note*

N.A

30%

Note:- Circular Dated 13/04/2020 F.No 370142/13/2020-TPL, has clarified that

Changes in TDS rates as per Finance Act 2020

1. Those who are having income under the head other than “Business and Profession” shall intimate of his/her option under Section 115BAC to his Employer and accordingly Employer shall deduct TDS according to New Tax Rate. But in case of No such Intimation Employer shall deduct TDS at Normal/Old Rate. Further, Such Intimation made to employer doesn’t have any relevance to option exercised at the time of return filing U/S139(1). It Means it may differ.

2. All those who are having Income Under head “PGBP” Shall exercised option after considering all intrinsic because option once exercised can not revoke on later on. (Refer:- Circular)

2

Payment to Contractor"

194C

Rs. 30000 Single Bill Or

Rs. 1,00,000

Aggt. Year

1%

2%

20%

Note:- Definition of “Work” under section, has been amended to include

In Contract for Manufacturing, the raw material supplied by the “Assessee or Its Associates” shall fall with in purview.Before Amendment it was a way to escapement from Tax Net, In case Supply of raw material by related person.

3

Fees for Technical Service

194J

Rs. 30000

2%

2%

20%

Note:- Due to reduce litigation between Authority and Assessee being an Interpretation issue under section 194C and 194J regarding short Deduction of Tax. Hence, Govt. has reduced rate of deduction for “Fees for Technical Service (not being Professional Serivce Or royalty in nature of consideration for sale, distribution or Exhibition of cinematographic film)”

 

Addendum Rates

   

Sr.No

Nature of Payment

Section

Limit

TDS Rate for

Ind. and HUF

Other than Ind. and HUF

If PAN Not Available

1

Income from Unit of Mutual Fund

194K

Rs. 5000

10%

10%

20%

Note:-

To deduct TDS income on Income in Nature of Dividend and not on Gain.

2

Payment on certain amount in Cash

194N

Rs. 1 Cr.

2%

2%

20%

Note:-

In case of Individual who had not filed Income tax Return for 3 Preceding Financial Year and withdraw amounting to more than 20 Lacs

  • 2% - from 20 lacs to 1 Cr
  • 5% - More than 20 Lacs

3

194M

194M

Rs. 50 Lacs

5%

N.A

20%

Note :- Payment of Commission, Brokerage, Fees, to resident person by Ind. or HUF exceeds specified limit shall have deduct TDS.

(From 01/09/2019)

4

TDS by E-Commerce operator

194O

Note*

1%

1%

5%/20%

Note:-

E-commerce operator shall deduct TDS at 1% at the time of Credit or Payment to E-Commerce Participant.

Exception:-

  • No TDS in case of Individual or HUF where in sale of goods or
  • Services doesn’t exceeds 5 Lacs and furnished PAN or Aadhaar.

TCS Rate Applicable from 01.10.2020

   

Sr.No

Nature of Payment

Section

Limit

TDS Rate for

Ind. and HUF

Other than Ind. and HUF

If PAN Not Available

1

Foreign Remittance Through LRS

206C(1G)

Note*

5%

5%

10%

Note:-

Collect TCS if Authorized Dealer receive amount exceeding Rs. 7 Lacs For remittance.

2

Overseas Tour Packages

206C(1G)

Any Amount

5%

5%

10%

 

3

Sale of Goods

206C

Note*

0.1%

0.1%

1%

Note:

1. Only those sellers whose total sales, gross receipts or turnover from the business carried on by it exceed ten crore rupees during the financial year immediately preceding the financial year, shall be liable to collect such TCS.

2. A seller of goods is liable to collect TCS at the rate on consideration received from a buyer in a previous year in excess of 50 Lacs.

3. Export of Goods not covered under Sale of Goods.

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