There’s a great relief for the Indian taxpayers! The government has reduced the rate of TDS & TCS rates under its newly introduced Atmanirbhar Bharat: The Special economic & comprehensive Corona relief package worth ₹20 lakh crores.
The Finance Minister of India Smt. Nirmala Sitharaman had explained the minute details of the Atmanirbhar Bharat economic revival package. Numerous reliefs were brought for the small MSME businesses. One of those reliefs is that the rate of TDS, as well as TCS, has been brought down by 25%.
Why is the rate of TDS & TCS reduced?
Due to the COVID-19 lockdown, there has been a great stagnation in our economy. The only way the can government overcome this economic distress is to release more funds into the hands of the general public so that economic activity can be revived.
In order to dispose of more funds into the hands of the general taxpayers, the rates of the Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) have been reduced by 25%.
What reduced rate of TDS means for taxpayers?
Let us understand what reduced rate of TDS means for taxpayers.
- Here, the reduced rate of TDS means– TDS for the non-salaried specified payments made to the resident taxpayers shall now be deducted at a 25% lesser rate that the existing rate.
- Similarly, the reduced rates of TCS means– TCS for some specified receipts shall now be collected at a 25% lesser rate that the existing rate.
What are the specified payments for the reduced TCS rate?
The Tax Collection at Source (TCS) has been reduced by 25% for some specified receipts. Those specified receipts are as below:
- Payment for the contract,
- Professional fee,
- Interest payment,
- Rent payment,
- Dividend payment,
- Payment of the commission,
So, these are announced reliefs for taxpayers as regards TCS & TDS rates. The taxpayers need to show the reduced rate of TDS and TCS while ITR filing and TDS return filing.
Now, if you require any other sort of guidance with respect to Income Tax Return filing or TDS return filing, please feel free to contact our business advisors at 8881-069-069.
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