To improve the availability of money in the hands of citizens govt has reduced some direct tax rates by reducing theses TDS rates there’ will be 50,000 crores availability. From 14th May 2020 to 31 st March 2021 all TDs rates ie., Contractors, interest, rent, dividend, commission, brokerage etc will be having a reduced rate of 7.5%.
For an example of any of the above bills, are 10,000 in the regular session 1000 is TDS but now 750 is the TDS to be deducted.
This gives a temporary relief
TDS rates reduced by 25 percent F.Y.2020-21 :
In order to provide more funds at the disposal of the taxpayers for dealing with the economic situation arising out of COVID-19 pandemic, the rates of Tax Deduction at Source (TDS) for the following non-salaried specified payments made to residents has been reduced by 25% for the period from 14th May 2020 to 31st March, 2021
| S.No | Section of the Income-tax Act | Nature of Payment | Existing Rate of TDS | Reduced rate from 14/05/2020 to 31/03/2021 |
| 1 | 193 | Interest on Securities | 10% | 7.5% |
| 2 | 194 | Dividend | 10% | 7.5% |
| 3 | 194A | Interest other than interest on securities | 10% | 7.5% |
| 4 | I 94C | Payment of Contractors and sub-contractors | 1% (individual/HU F) 2% (others) | 0.75% (individual/HUF) 1.5% (others) |
| 5 | 194D | Insurance Commission | 5% | 3.75% |
| 6 | 194DA | Payment in respect of life insurance policy | 5% | 5%3.75% |
| 7 | 194EE | Payments in respect of deposits under National Savings Scheme | 10% | 7.5% |
| 8 | 194F | Payments on account of re-purchase of Units by Mutual Funds or UTI | 20% | 15% |
| 9 | 194G | Commission, prize, etc., on sale of lottery tickets | 5% | 3.75% |
| 10 | 194H | Commission or brokerage | 5% | 3.75% |
| 11 | 194-I(a) | Rent for plant and machinery | 2% | 1.5% |
| 12 | 194-I(b) | Rent for immovable property | 10% | 7.5% |
| 13 | 194-IA | Payment for acquisition of immovable property | 1% | 0.75% |
| 14 | 194-IB | Payment of rent by individual or HUF | 5% | 3.75% |
| 15 | 194-IC | Payment for Joint Development Agreements | 10% | 7.5% |
| 16 | 1941 | Fee for Professional or Technical Services (FTS), Royalty, etc | 2% (FTS, certain royalties, call centre) 10% (others) | 1.5% (FTS, certain royalties, call centre) 7.5% (others) |
| 17 | 194K | Payment of dividend by Mutual Funds | 10% | 7.5% |
| 18 | 194LA | Payment of Compensation on acquisition of immovable property | 10% | 7.5% |
| 19 | 194LBA(I ) | Payment of income by Business trust | 10% | 7.5% |
| 20 | 194LBB(i) | Payment of income by Investment fund | 10% | 7.5% |
| 21 | 194LBC(l | Income by securitisation trust | 25%(Individual/HUF) 30% (Others) | 18.75% (Individua l/HUF) 22.5% (Others) |
| 22 | 194M | Payment to commission , brokerage etc. by Individual and HUF | 5% | 3.75% |
| 23 | 194-0 | TDS on e-commerce participants | 1% (w.e.f. 1.10.2020) | 0.75% |
Therefore, TDS on the amount paid or credited during the period from 14th May 2020 to 31st March 2021 shall be deducted at the reduced rates specified in the table.
It is further stated that 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. For example, if the tax is required to be deducted at 20% under section 206AA of the Income-tax Act due to non-furnishing of PAN/Aadhaar , it shall be deducted at the rate of 20% and not at the rate of 15%.