COVID-19 relief to taxpayers: TDS, TCS rates reduced by 25% rate for non-salary payments till March 2021

New Delhi: The finance ministry has listed several measures taken by the government in 2020 for the common people. As the year comes to an end, let us glance through the key initiatives/announcements along with their progress undertaken by Ministries of Finance & Corporate Affairs during the year, a Finance Ministry tweet said.

To provide more funds at the disposal of the taxpayers in these difficult times, the TDS & TCS rates have been reduced by 25 percent of the specified rates in the period from 14th May, 2020 to 31st March, 2021.

Easing tax compliance during COVID19 and to provide relief to taxpayers, various compliances under TDS/TCS provisions were relaxed.

In May this year, the government slashed TDS/TCS rate for non-salary payments to residents by 25 percent for the remaining months of the fiscal. Announcing a slew of measures to help companies and taxpayers amid the COVID-19 crisis, Finance Minister Nirmala Sitharaman said the reduction in TDS (tax deducted at source)/TCS (tax collected at source) rate would release about Rs 50,000 crore in the hands of people.

However, there shall be no reduction in rates of TDS or TCS, where the tax is required to be deducted or collected at higher rate due to non-furnishing of PAN/Aadhaar. For example, if the tax is required to be deducted at 20 per cent under section 206 AA of the Income-tax Act due to non-furnishing of PAN/Aadhaar, it shall be deducted at the rate of 20 per cent and not at the rate of 15 per cent.