Reduced TDS Rate for the FY 2020-21

As we know that the world is facing the pandemic and everyone got affected by this very badly whether in terms of monetary or non-monetary. Government has taken various steps on time to time to give relief to taxpayer’s whether in terms of reducing rates, relief packages and extension of time limit of various compliances.

A press released has been conducted on 13.05.2020 and one of the major announcement has been made by our finance minister for reduction in TDS rates by 25% under income tax act and give liquidity to taxpayer’s.

We have summarised only those TDS rates which has been reduced w.e.f 14.05.2020 and these are as under:

TDS RATES FOR RESIDENT OF INDIA

TDS and Nature of Payment	Up to 13.05.2020	Amended w.e.f. 14.05.2020
Section 193 Interest on Securities	10%	7.5%
Section 194 Dividend other than Section 115-O) (Applicable from 01.04.2020)	10%	7.5%
Section 194A Income by way of interest other than Section 193	10%	7.5%
Section 194C Payment to Contractor -Individual/HUF -Other than Individual/HUF	1% 2%	0.75% 1.5%
Section 194D Commission on Insurance	5%	3.75%
Section 194DA Payment in respect of Life insurance policy	5%	3.75%
Section 194EE Payment on account of repurchase of a unit by Mutual Fund or Unit Trust of India	20%	15%
Section 194G Commission on the sale of lottery tickets	5%	3.75%
Section 194H Commission or brokerage	5%	3.75%
Section 194I -Rent of Plant and machinery -Rent of Land or building or furniture	2% 10%	1.5% 7.5%
Section 194IA Payment on transfer of certain immovable property other than agricultural land	1%	0.75%
Section 194IB Payment of rent by individual or HUF not liable to tax audit	5%	3.75%
Section 194IC Payment under Joint Development Agreements to Individual/HUF	10%	7.5%
Section 194J -Fee for Professional service, Remuneration/fee/commission to a director, For not carrying out any activity in relation to any business For not sharing any know-how, patent, copyright etc. -Fee for technical services and Royalty towards the sale or distribution or exhibition of cinematographic films	10%   2%	7.5%     1.5%
Section 194K Payment of any income in respect of: -units of a mutual fund as per section 10(23D); or -the units from the administrator; or -units from specified company (Applicable from 01.04.2020)	10%	7.5%
Section 194LA Payment of compensation on acquisition of certain immovable property	10%	7.5%
Section LBA Specified income distributed by a business trust to its unit holder	10%	7.5%
Section LBB Certain income distributed by an investment fund to its unit holder	10%	7.5%
Section LBC Income in respect of investment made in a securitization trust -Individual/HUF -Others	25%                             30%	18.75%                                    22.5%
Section 194M Payment of Commission, brokerage, contractual fee, professional fee -by Individual/HUF who are not liable to deduct TDS u/s194C. 194J & 194H -To a resident person	5%	3.75%
Section 194O 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)	1%	0.75%

Note:

• Interest income from post office and bank deposit is exempt up to 40,000.
• Interest income from post office, bank deposit, fixed deposit and recurring deposit is exempt up to 50,000 for senior citizens.
• TDS limit of rent has been increased from 1,80,000 to 2,40,000 w.e.f. 01.04.2019.

TDS RATE FOR DOMESTIC COMPANIES

TDS and Nature of Payment	Up to 13.05.2020	Amended w.e.f. 14.05.2020
Section 193 Interest on Securities	10%	7.5%
Section 194 Dividend	10%	7.5%
Section 194A Income by way of interest other than Section 193	10%	7.5%
Section 194C Individual/HUF Others than individual/HUF	1% 2%	0.75% 1.5%
Section 194D Insurance Commission	5%	3.75%
Section 194DA Payment in respect of Life insurance policy	5%	3.75%
Section 194EE Payment in respect of deposit under National saving Scheme (NSS)	10%	7.5%
Section 194F Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India	20%	15%
Section 194G Commission, etc., on sale of lottery tickets	5%	3.75%
Section 194H Commission or brokerage	5%	3.75%
Section 194I Rent of plant & Machinery Rent of Land & building or furniture & fittings	2% 10%	1.5% 7.5%
Section 194IA Payment on transfer of certain immovable property other than agricultural land	1%	0.75%
Section 194IB Rent payable by an individual or HUF not covered u/s. 194I	5%	3.75%
Section 194IC Payment under Joint Development Agreements to Individual/HUF	10%	7.5%
Section 194J -Fee for Professional service, Remuneration/fee/commission to a director, For not carrying out any activity in relation to any business For not sharing any know-how, patent, copyright etc.   -Fee for technical services and Royalty towards the sale or distribution or exhibition of cinematographic films	10%     2%	7.5%     1.5%
Section 194LA Payment of Compensation on the acquisition of certain immovable property	10%	7.5%
Section 194LBA Certain income distributed by a business trust to its unit holder	10%	7.5%
Any other income	10%	7.5%

Note: We have covered the only those rates which has been reduced w.e.f 14.05.2020 to 31.03.2021

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