Need Tally
for Clients?

Contact Us! Here

  Tally Auditor

License (Renewal)
  Tally Gold

License Renewal

  Tally Silver

License Renewal
  Tally Silver

New Licence
  Tally Gold

New Licence
 
Open DEMAT Account with in 24 Hrs and start investing now!
« Direct Tax »
Open DEMAT Account in 24 hrs
 Income tax exemption: 4 financial instruments you can still invest into before March 31
 CBDT drops small tax demands but not TCS, TDS claims
 ITR Refund: Awaiting money from Income Tax? Here's why you have not yet received your amount
 Income Tax Notice: What to do if you receive a Section 143 (1) notice from taxman?
 Average tax return processing time cut to 10 days: CBDT
 7 types of Income Tax Notice ITR filers may receive for AY 2023-24
 ITR filing: Do these advance preparations before filing your income tax return
 What are the strategies to maximize tax refunds after submitting an income tax return (ITR)?
 ITR filing: Tax rules on income from house property that your should know
 CBDT likely to issue rules on angel tax next week
 Pension Taxation: Everything you need to know for ITR filing

CBDT notification: Tax on dividend, rent, insurance, professional fee, property purchase cut by 25 per cent
May, 15th 2020

Tax deducted on payment of dividend, insurance policy, rent, professional fee and on the acquisition of immovable property has been cut by 25 per cent for a period up to March 31, the tax department has said. Following Finance Minister Nirmala Sitharaman’s announcement of a reduction in the rate of tax deducted at source (TDS) and tax collected at source (TCS) for non-salaried payments, the Central Board of Direct Taxes (CBDT) notified revised rates that will be applicable from May 14, 2020, to March 31, 2021.

Announcing a slew of measures to help companies and taxpayers tide over hardships caused by coronavirus lockdown, Sitharaman had on Wednesday stated that the reduction in TDS/TCS rate would release about Rs 50,000 crore in the hands of people. In the notification, the CBDT said while TCS on sale of the motor vehicle above Rs 10 lakh has been cut to 0.75 per cent from 1 per cent earlier, TDS on 23 items has been reduced.

The CBDT said TDS on payment for life insurance policy has been reduced to 3.75 per cent from 5 per cent, while that on dividend and interest as well as rent for immovable property has been cut to 7.5 per cent from 10 per cent earlier. The 1 per cent TDS charged on payment made for the acquisition of immovable property has now been reduced to 0.75 per cent. Payment of rent by individual or HUF has been cut to 3.75 per cent from 5 per cent earlier.

TDS on e-commerce participants has also been reduced to 0.75 per cent from 1 pr cent. Similarly, tax on professional fee has been reduced to 1.5 per cent from 2 per cent. TDS on payments in respect of deposits under National Savings Scheme has been reduced to 7.5 per cent from 10 per cent and that on payments for re-purchase of units by Mutual Funds to 15 per cent from 20 per cent. The same on insurance commission and brokerage have been cut to 3.75 per cent from 5 per cent.

TDS on payment of dividend by mutual funds has been reduced to 7.5 per cent from 10 per cent. TCS on sale of tendu leaves, scrap, timber, forest produce, and minerals such as coal, lignite or iron ore has also been reduced. The CBDT said there shall be no reduction in rates of TDS or TCS where the tax is required to be deducted or collected at a higher rate due to the non-furnishing of PAN/Aadhaar. Nangia Andersen LLP Director Sandeep Jhunjhunwala said: “The reduction of TDS and TCS rates on non-salaried payments by 25 per cent will set free additional cash in the hands of the vendors, and help increase liquidity in the economy”.

“This relief could be enjoyed by all businesses and would play a pivotal role in increasing cash flows as the beneficial rates would be available until the end of the current financial year.” Deloitte India Partner Rohinton Sidhwa said, “The TDS / TCS cut will release liquidity into the system. Most assessees would have deluged the tax department with applications for lower withholding in any case and this effectively will also reduce administrative burden”.

PwC India Partner (Tax and Regulatory) Vikram Doshi said, “The immediate reduction of TDS rate by 25 per cent is a direct and practical measure to increase liquidity in the system. While there was an expectation of a higher rate of reduction, the longer period of reduction till March 31, 2021, balances the slightly lower rate. “The extension of due dates of various compliances provides additional relief given the practical difficulty in undertaking compliances.”

Home | About Us | Terms and Conditions | Contact Us
Copyright 2024 CAinINDIA All Right Reserved.
Designed and Developed by Ritz Consulting