Tax deduction at source is a means of collecting tax on income, dividends or asset sales, by requiring the payer to deduct tax due before paying the balance to the payee. In India, under the Indian Income Tax Act of 1961, income tax must be deducted at source as per the provisions of the Income Tax Act, 1961.
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 | 194C | Payment of Contractors and sub-contractors | 1% (individual/HUF)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% | 3.75% |
| 7 | 194EE | Payments in respect of deposits under National | 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 | 194J | 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(1) | Payment of income by Business trust | 10% | 7.5% |
| 20 | 194LBB(i) | Payment of income by Investment fund | 10% | 7.5% |
| 21 | 194LBC(1) | Income by securitisation trust 25% (Individual/HUF) 30% (Others) | 18.75% (Individual/HUF) | 22.5% (Others) |
| 22 | 194M | Payment to commission, brokerage etc. by Individual and HUF | 5% | 3.75% |
| 23 | 194-O | TDS on e-commerce participants | 1%(w.e.f. 1.10.2020) | 0.75% |
LeadTax provides TDS return filing service with our passionate Tax Expert support. Our experts will assist you in making payment of challan and file your TDS return and share you the Form 16 or Form 16A.