Central Government has announced NEW REDUCED TDS (Tax deduction at Source) & TCS (Tax Collection at Source) Rates applicable for the period 14th May 2020 to 31st March 2021. These TDS Rates are reduced by 25% from their existing TDS Rates.
Let’s check with an example :
1 As per Income Tax Department, If person “A” hires a freelancer professional “B” for website development and A has to pay fees of Rs. 1000000 for website development, As per old provisions, A has to deduct TDS of Rs. 100000 @ 10% of TDS rate and make payment of Rs. 900000/-.
But from 14th May Mr. A has to deduct TDS @7.5% (i.e. rate after reduction of 25%). So Mr. A will deduct TDS Rs. 7500/- and will make payment of Rs. 925000/-. So from this provision, Mr. B will get Rs. 25000/- for his business working capital due to lower TDS Rates.
These TDS & TCS Rates has been reduced to help industries & business men in amid of COVID-19 relief.
New TDS & TCS Rate chart can be downloaded from the below link:
CA Lukesh Sethi