Nirmala Sitharaman, India's finance minister, wears a protective face mask as she speaks during a news conference in New Delhi.(Bloomberg)
Nirmala Sitharaman, India's finance minister, wears a protective face mask as she speaks during a news conference in New Delhi.(Bloomberg)

TDS, TCS reduced by 25%. Here is how it will work in 7 FAQs

This reduced rate of TDS will apply to the specified list of payments including dividend, payment to contractors and sub-contractors, insurance commission, brokerage, rent for machinery and immovable property and professional fee.
By HT Correspondent | Hindustan Times, New Delhi
UPDATED ON MAY 14, 2020 01:51 AM IST

The Central Board of Income Tax on Wednesday ordered a 25% reduction in the rate of income tax deducted at source (TDS) and tax collection at source (TCS) from 14 May to 31 March to provide more money in the hands of taxpayers.

This concession is applicable for 23 specified payments where TDS is levied at rates ranging between 20% and 1% and 11 payments where TCS is applicable.

What does this mean

According to the income tax department, if somebody hires a professional P who is to receive Rs 1 Crore as fee, then a TDS of Rs. 10 lakh is required to be deducted at the existing rate of 10% before payment is made to P. As a result, P would have received Rs 90 lakh only.

But since the TDS rates have been reduced from 10% to 7.5%, P will receive Rs 92.5 lakh. Thus, P will get an extra money of Rs 2.5 lakh due to lower TDS rate.

 

What other payments are covered?

This reduced rate of TDS will apply to the specified list of payments including dividend, payment to contractors and sub-contractors, insurance commission, brokerage, rent for machinery and immovable property and professional fee. Here is the comprehensive table of existing and new reduced rates issued by the Income Tax department.

Will the bank also pass on this TDS benefit to customers?

Yes. According to the income tax department, if someone A is to receive bank interest of Rs 20,000, then at the existing rate of 10% the bank would have deducted TDS of Rs 2,000. Since the new rate of TDS would be 7.5%, the bank will be required to deduct only Rs 1,500. So person A will get an extra liquidity of Rs. 500.

What about payments that have already been made?

This relaxation only applies to payment made between 14 May 2020 and 31 March 2021. So this will not cover payments made before 14 May 2020.

Does this reduce my income tax liability?

Not really. 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.

That means it only defers my tax liability?

Yes. But for landlords and professionals such as chartered accountants, architects, doctors, lawyers, engineers, freelancers and consultants, this reduction would practically increase the money in hand by 2.5%. Like if a person has rented out a house for Rs 1 lakh, the tenant is required to deduct 10% of the rent as TDS and the landlord would get Rs 90,000 in hand. Now, the tenant would be required to deduct only Rs 7,500 and hand over the remaining Rs 92,500.

Will an individual get this concession even if he or she doesn’t present a PAN or Aadhaar number?

No. There shall be no reduction in rates of TDS or TCS for those who do not furnish PAN/Aadhaar.

So if the tax is required to be deducted at 20% due to non-furnishing of PAN or Aadhaar, it shall be deducted at the rate of 20% and not at the rate of 15%.

SHARE THIS ARTICLE ON
Topics
app
Close
Fintech players are urging Union Minister for finance and corporate affairs, Nirmala Sitharaman to ease lending.(ANI)
Fintech players are urging Union Minister for finance and corporate affairs, Nirmala Sitharaman to ease lending.(ANI)

NBFCs, fintech companies urge FM Sitharaman to enhance lending facilities

ANI, New Delhi
PUBLISHED ON JAN 19, 2021 03:10 PM IST
Income Tax Act section 194 provides exemptions to banks for tax deduction at source.
Close
FILE PHOTO: Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on a PC motherboard in this illustration picture, February 14, 2018. REUTERS/Dado Ruvic/Illustration/File Photo(REUTERS)
FILE PHOTO: Representations of the Ripple, Bitcoin, Etherum and Litecoin virtual currencies are seen on a PC motherboard in this illustration picture, February 14, 2018. REUTERS/Dado Ruvic/Illustration/File Photo(REUTERS)

Bitcoin’s turbulence helps kindle rally in largest rival Ether

Bloomberg
PUBLISHED ON JAN 19, 2021 01:40 PM IST
Bitcoin’s recent wobbles have turned the cryptocurrency spotlight onto other digital coins including Ether, whose gain this year has outstripped the performance of its bigger rival.
Close
Foreign portfolio investors bought $2.44 billion worth of Indian stocks in January ht(MINT_PRINT)
Foreign portfolio investors bought $2.44 billion worth of Indian stocks in January ht(MINT_PRINT)

Mindtree shares climb 6% as net profit jumps in Q3 report

PTI
PUBLISHED ON JAN 19, 2021 11:34 AM IST
The stock gained 5.96 per cent to 1759.70 on BSE. On NSE, it jumped 5.79 per cent to 1,760.
Close
A view at a petrol pump in Thane, Maharashtra. ( Praful Gangurde/ HT Photo )
A view at a petrol pump in Thane, Maharashtra. ( Praful Gangurde/ HT Photo )

Petrol price touches record high of 85 in Delhi, diesel surpasses 75 mark

By hindustantimes.com | Written by Kanishka Sarkar, Hindustan Times, New Delhi
PUBLISHED ON JAN 19, 2021 09:31 AM IST
In Mumbai, diesel price crossed 82-mark while petrol is selling for as high as 91.80 per litre. In Kolkata, diesel is priced at Rs78.97 and petrol at 90.16 per litre.
Close
People watch the Sensex on a screen outside Bombay Stock Exchange (BSE) in Mumbai. (PTI File Photo)
People watch the Sensex on a screen outside Bombay Stock Exchange (BSE) in Mumbai. (PTI File Photo)

Sensex jumps over 700 points to 49,274; Nifty nears 14,500

Reuters
UPDATED ON JAN 19, 2021 01:15 PM IST
The Nifty and Sensex hit record highs last week and saw investors book some profit after the record run.
Close
In 2018, the Union cabinet chaired by Prime Minister Narendra Modi approved the proposal for closure of two autonomous bodies, namely the Rashtriya Arogya Nidhi and Jansankhya Sthirata Kosh.(AP)
In 2018, the Union cabinet chaired by Prime Minister Narendra Modi approved the proposal for closure of two autonomous bodies, namely the Rashtriya Arogya Nidhi and Jansankhya Sthirata Kosh.(AP)

Government may rationalise 120 autonomous bodies

By Anisha Dutta, New Delhi
UPDATED ON JAN 19, 2021 11:14 AM IST
In a slew of recommendations to the cabinet secretariat, a copy of which has been reviewed by Hindustan Times, the department has suggested that 83 of the 231 autonomous bodies be retained and 117 merged into just 29. It recommended that the Centre disengage from 20 entities.
Close
The Union Budget will be presented by finance minister Nirmala Sitharaman on February 1.(PTI)
The Union Budget will be presented by finance minister Nirmala Sitharaman on February 1.(PTI)

Centre likely to set up DFIs to meet infra funding needs

By Rajeev Jayaswal, New Delhi
PUBLISHED ON JAN 19, 2021 06:32 AM IST
A large DFI is necessary for rapid infrastructure development, likely to be one of the key focus areas of budget 2021-22. Infrastructure development will put India on the higher growth trajectory with its cascading impact on every sector of the economy, the people added, requesting anonymity.
Close
The new vehicle, code-named ‘YFG’, is based on Suzuki’s popular global SUV brand, Grand Vitara, the people said, requesting anonymity.(MINT_PRINT)
The new vehicle, code-named ‘YFG’, is based on Suzuki’s popular global SUV brand, Grand Vitara, the people said, requesting anonymity.(MINT_PRINT)

Suzuki takes SUV battle to Hyundai

By Malyaban Ghosh, New Delhi
UPDATED ON JAN 19, 2021 07:17 AM IST
The new SUV would be sold under both Suzuki and Toyota brand names, the people said. It is likely to come equipped with a strong gasoline hybrid powertrain to help both companies qualify for the stricter second phase of corporate average fuel efficiency norms, they added.
Close
While the correction in stock prices is a healthy sign, an unfavourable announcement in the budget may lead to deeper cuts(HT photo)
While the correction in stock prices is a healthy sign, an unfavourable announcement in the budget may lead to deeper cuts(HT photo)

Stocks extend decline on weak global cues, valuation concerns

By Nasrin Sultana, Mumbai
PUBLISHED ON JAN 19, 2021 06:25 AM IST
Investors and analysts are, however, clear that the current decline is unlikely to end up as a deep correction as the factors that powered the over 80% rally since March lows are intact. The rally took the benchmark Sensex to within sniffing distance of the 50,000 mark.
Close
India vaccinated 148,266 people on Monday, taking the total to 381,305. (Bloomberg)
India vaccinated 148,266 people on Monday, taking the total to 381,305. (Bloomberg)

Indian companies consider buying vaccines for employees

Reuters
PUBLISHED ON JAN 18, 2021 11:31 PM IST
Steel producer Jindal Steel and Power Ltd, autos-to technology conglomerate Mahindra Group and consumer goods giant ITC Ltd have begun initial checks on vaccines being available to buy after the government covers priority segments.
Close
FILE PHOTO: International Monetary Fund (IMF) Managing Director Kristalina Georgieva makes remarks during a closing news conference for the International Monetary Finance Committee (IMFC), during the IMF and World Bank's 2019 Annual Meetings of finance ministers and bank governors, in Washington, U.S., October 19, 2019. REUTERS/Mike Theiler/File Photo(REUTERS)
FILE PHOTO: International Monetary Fund (IMF) Managing Director Kristalina Georgieva makes remarks during a closing news conference for the International Monetary Finance Committee (IMFC), during the IMF and World Bank's 2019 Annual Meetings of finance ministers and bank governors, in Washington, U.S., October 19, 2019. REUTERS/Mike Theiler/File Photo(REUTERS)

IMF chief sees 'high degree of uncertainty' in global outlook

Reuters
PUBLISHED ON JAN 18, 2021 08:51 PM IST
IMF Managing Director Kristalina Georgieva said a new allocation of the IMF's own currency, Special Drawing Rights, would help give countries more fiscal space to tackle the health crisis and shift to a digital and green economy.
Close
Risks to the recovery could be in the form of additional regulatory measures, protracted restrictions on international travel and jump in the pandemic in new cases, said the report. (Representative Image)
Risks to the recovery could be in the form of additional regulatory measures, protracted restrictions on international travel and jump in the pandemic in new cases, said the report. (Representative Image)

Healthcare sector's revenue expected to grow 20% in 2021-22: Report

PTI
PUBLISHED ON JAN 18, 2021 07:58 PM IST
Domestic rating agency Icra has a stable outlook for the sector in the long-term outlook, given the swift rebound in occupancy as well as structural factors.
Close
After a decent show so far in 2020 despite the pandemic, the IPO market is awaiting a bumper crop with more than 30 IPOs worth over <span class='webrupee'>₹</span>30,000 crore lined up for the new year.(AP/ Representational)
After a decent show so far in 2020 despite the pandemic, the IPO market is awaiting a bumper crop with more than 30 IPOs worth over 30,000 crore lined up for the new year.(AP/ Representational)

IRFC IPO subscribed 65% on first day of offer

PTI
PUBLISHED ON JAN 18, 2021 07:58 PM IST
Price range for the offer, which is scheduled to close on Wednesday, has been fixed at 25-26 per share.
Close
The total amount released so far in 12 instalments is <span class='webrupee'>₹</span>72,000 crore at an average interest rate of 4.70 per cent.(PTI)
The total amount released so far in 12 instalments is 72,000 crore at an average interest rate of 4.70 per cent.(PTI)

GST compensation shortfall: FinMin releases installment of 6,000 cr to states

PTI, New Delhi
PUBLISHED ON JAN 18, 2021 07:00 PM IST
The Centre had set up a special borrowing window in October 2020 to meet the estimated shortfall of 1.10 lakh crore in revenue arising on account of implementation of Goods and Services Tax (GST).
Close
A visitor wearing a face mask to protect against the coronavirus walks among vehicles from Nissan at the Beijing International Automotive Exhibition in Beijing. China.(AP/ File)
A visitor wearing a face mask to protect against the coronavirus walks among vehicles from Nissan at the Beijing International Automotive Exhibition in Beijing. China.(AP/ File)

Nissan to promote Japan-based contract workers to full-time

Bloomberg
PUBLISHED ON JAN 18, 2021 05:34 PM IST
The hiring plan will “enable more efficient and effective business operations as well as improve individuals’ motivation and skills,” Azusa Momose, a spokeswoman for the company said.
Close
SHARE
Story Saved
OPEN APP