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Govt cuts TDS, TCS rates for non-salaried payments by 25%

CNBCTV18 logo CNBCTV18 13-05-2020 Anshul

In order to provide more funds at the disposal of the taxpayers, the government reduced rates of Tax Deduction at Source (TDS) for non-salaried specified payments made to residents and rates of Tax Collection at Source (TCS) for the specified receipts by 25 percent of the existing rates.

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"The payment for contract, professional fees, interest, rent, dividend, commission, brokerage, etc. will be eligible for this reduced rate of TDS," Finance Minister Nirmala Sitharaman said.

This reduction will be applicable for the remaining part of the FY 2020-21 i.e. from May 14 to March 31, 2021.

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"This move will release Rs 50,000 crore into the system," Sitharaman said.

Industry experts hailed the FM's decision.

"The reduction in the rate for withholding taxes and for TCS is indeed welcome. It will provide additional liquidity in the hands of individuals and will therefore spur demand. While this reduction by 25 percent of the current rate is welcome, there is a need to issue expeditiously lower rate certificates where applied for by the tax payers," said Dinesh Kanabar, CEO, Dhruva Advisors.

Indian currency notes © AP Photo/Channi Anand, File Indian currency notes

According to Archit Gupta, Founder, and CEO, ClearTax, the reduction in TDS and TCS rates for non-salaried payments will further increase cash in hand for taxpayers, leading to a consequent boost in demand, setting the economy rolling.

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