Reduced Rate of TDS by 25% announced due to COVID 19

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The government announced a reduced TDS rate of 25% due to COVID-19, bringing the applicable rate down to 7.5%. This discussion clarifies how this reduced rate applies to interest payments made after the announcement. It also addresses whether this reduction is mandatory or optional, with the consensus being that while the reduced rate is available, parties can still opt for the original higher rate if they prefer, though any amount deducted must be deposited with the government.

AKHILESH

AKHILESH (Querist)
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29 May 2020 Sir
I just want to know how the TDS will be applicable on following:-
Eg If Interest due to funder on 30th May 2020 is Rs 100000 whether TDS will be deducted @ 7.5% on whole Rs 1 Lacs ie.. Rs. 7500/- or
From 1st May to 13th May 2020 Rs 45000 * 10%= 4500/- &
From 14th May to 30th May 2020 Rs 55000*7.5% = 4125/-

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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29 May 2020 TDS will be deducted @ 7.5% on whole Rs 1 Lacs ie.. Rs. 7500/-

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AKHILESH

AKHILESH (Querist)
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29 May 2020 Sir thanks for the clarity....One more clarity is required
Whether the reduced rate is mandatory or optional because some parties are saying that no need to reduce the TDS rate and some are saying that it should be deducted on reduced rate.
Just give us the clarity whether it is mandatory or optional.?

CA Sindhu KJ

CA Sindhu KJ (Expert)
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29 May 2020 Lets say earlier the rate was 10% due to revision it'll now be 7.5%. Anything collected or paid above 7.5% will be considered as excess.

If the party insists on regular deduction(Ex: 10%, Rs.10,000) , no harm in doing the same. But whatever is deducted should be deposited to government (10,000).

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