The government on Thursday clarified the cut in TDS, TCS. On Wednesday, Finance Minister Nirmala Sitharaman announced that the rate of TDS for non-paid specified payments to residents and TCS for specified receipts by March 31, 2021 is being reduced by 25% from the current rate. It has also come into force from 14 May. On Thursday, Revenue Secretary Ajay Bhushan Pandey said in the press conference that 23 things are being cut in TDS. These include securities, bank accounts, payments to professionals, etc.
Similarly, the cut in TCS has occurred in 12 cases. Pandey said that the motive behind this deduction is that more money is left for people to spend. TDS, TCS cuts will save people 50000 crore rupees. The Central Board of Direct Taxes (CBDT) notified the revised TDS, TCS rates on 14 May. The benefit of this deduction will not be on TDS or TCS in cases where TDS or TCS is deducted at a higher rate due to non-availability of PAN / Aadhaar details.
- CBDT has stated in its notification that TDS on dividend, insurance policy, rent, professional fees and purchase of immovable property has come down by 25 per cent as on 31 March 2021. TDS has been deducted on payment in a total of 23 cases.
- The TDS on ecommerce partners has come down from 1 per cent to 0.75 per cent.
- TDS on dividend, interest and real estate rent has been reduced from 10% to 7.5%.
- The TDS on payment for life insurance policy has come down from 5% to 3.75%.
- The TDS on payment of professional fees has been reduced from 2 per cent to 1.5 per cent.
- The TDS on payment for the purchase of immovable property has come down from 1 per cent to 0.75 per cent. TDS on payment of personal rent or rent by HUF has come down from 5 per cent to 3.75 per cent.
- TCS has also reduced sales of tendu leaves, scrap, timber, forest produce and minerals such as coal, lignite or iron ore.
- TCS has come down from 1 percent to 0.75 percent on motor vehicle sales of more than Rs 10 lakh.
- TDS on payment of dividend by mutual funds has come down from 10% to 7.5%.
- TDS on Insurance Commission and Brokerage has come down from 5% to 3.75%.
- TDS on payment for the repurchase of units by mutual funds has come down from 20 per cent to 15 per cent.
- In the case of deposits under the National Savings Scheme, the TDS on payments has come down from 10 per cent to 7.5 per cent.