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In order to increase liquidity and to provide more funds in the hands of the common man battling with COVID19 pandemic, the Government of India announced various relief measures on May 13, 2020, under the Aatmanirbhar Bharat Scheme. One of such relief is a reduction in the tax deducted at source (TDS) and tax collected at source (TCS) rates by 25 per cent on non-salaried payments.
In order to know everything in details read the below-mentioned FAQs:
Question 1. When it will become applicable and what is the revised rate for TDS and TCS?
Answer: Applicability of revised rates: This reduction shall be applicable for the remaining part of the FY 2020 21 i.e. from 14th May 2020 to 31st March 2021.
Please refer to the below table for revised TDS rates applicable for FY 2020-21 w.e.f. 14.05.2020:
Question 2. Does this reduce the tax liability of the taxpayer?
Answer: The individual shall eventually have to pay the tax at the applicable rate, depending on the income. Those who are liable for advance tax will have to make the payment every quarter. Others will have to pay when filing income tax returns.
Question 3. What about the payment already made in this Financial Year?
Answer: This relaxation only applies to payment made between 14 May 2020 and 31 March 2021. So, this will not cover payments made prior to 14 May 2020.
Note: There are the following exceptions to this revision:
a) There shall be no reduction in rates of TDS or TCS for those who do not furnish PAN/Aadhaar.
b) TDS rates for salaried persons shall remain unchanged.
c) TDS rates for Non-Resident Persons shall remain unchanged.
Conclusion: Reduction in TDS and TCS rates for non-salaried payments is an innovative and welcome step to put money in the hands of service industry bridging some of the gaps in working capital created due to Coronavirus induced lockdown. The revised rate will benefit the professionals, self-employed, and senior citizens who earn interest income and rental income.
Article By: Ms Bhavya Sharma, a Practising Company Secretary from Delhi. In order to know more about the above-mentioned topic you can connect with us. You can contact us at legal@bhavyasharmaandassociates.com or for more details you can visit: www.bhavyasharmaandassociates.com
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