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 Indians have 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 a higher rate due to the non-furnishing of PAN/Aadhaar.
Now, let’s have a look at the TDS/TCS Rates applicable for the 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 | 30000 | ||||
| transaction-Individual/HUF | 1 | – | 0.75 | – | ||
| -Others | 2 | – | 1.5 | – | ||
| 194C | Contractor – Consolidated Payment During the F.Y. | 100000 | ||||
| – Individual/HUF | ||||||
| – Others | 1 | – | 0.75 | – | ||
| 2 | – | 1.5 | – | |||
| 194D | Insurance commission | 15000 | ||||
| – Other than Company | 5 | – | 3.75 | – | ||
| – Company | 10 | – | 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 | 240000 | 2 | – | 1.5 | – |
| – Land and Building/Furniture & Fixture | 10 | – | 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 center 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 | 5000 | 10 | – | 7.5 | – |
| (a) units of a mutual fund as per section 10(23D); or | ||||||
| (b) the units from the administrator; or | ||||||
| (c) units from a specified company | ||||||
| (w.e.f. 01.04.2020) | ||||||
| 194LA | Compensation on the transfer of certain immovable property other than agriculture land | 250000 | 10 | – | 7.5 | – |
| (TDS exempted if covered under RFCTLARR Act w.e.f. 01.04.2017) | ||||||
| 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 | 10 | 5 | 7.5 | 5 | ||
| – dividend referred to in sub-section (7) of section 115-O | ||||||
| 10 | 10 | 7.5 | 10 | |||
| 194LBA | Distribution of rental income to unitholders | – | ||||
| – Other than Company | ||||||
| – Company | 10 | 30 | 7.5 | 30 | ||
| 10 | 40 | 7.5 | 40 | |||
| 194LBB | Income in respect of units of investment fund | – | ||||
| – Other than Company | ||||||
| – Company | 10 | 30 | 7.5 | 30 | ||
| 10 | 40 | 7.5 | 40 | |||
| 194LBC | Income in respect of investment in securitization fund | – | ||||
| – Individual/HUF | ||||||
| – Company | 25 | 30 | 18.75 | 30 | ||
| – Other Person | 30 | 40 | 22.5 | 40 | ||
| 30 | 30 | 22.5 | 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 a 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 a certain amount in cash | 1 Crore | 2 | 2 | 2 | 2 |
| 194N | Payment of certain amount in cash (first proviso of section 194N)if- | |||||
| – The 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. | 2 | 2 | ||
| N.A. | N.A. | 5 | 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 | The income of Investment made by an NRI | – | – | 20 | – | 20 |
| 195 | Long-term capital gain | – | ||||
| – Under Section – 115E/ | ||||||
| 112(1)(c)(iii)/112A | – | 10 | – | 10 | ||
| – Any Other Gains | – | 20 | – | 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 | – | – | 30 | – | 30 |
| – Company | ||||||
| – | 40 | – | 40 | |||
| 196A | Income in respect – | – | – | 20 | – | 20 |
| – 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 | ||||||
| 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 | The 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.
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 program 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.