List of Direct-tax measures announced by the Finance Minister
The Finance Minister, Smt. Nirmala Sitharaman has addressed a press conference on May 13, 2020, to share the details of Rs 20 lakh crore economic package announced by the Prime Minister, Sh. Narendra Modi.
The Finance Minister has announced several packages for the Micro, Small and Medium Enterprises (MSME) sector to provide them some sort of relief under the COVID-19 pandemic. A slew of measures has been announced by the FM which includes collateral-free automatic loan, the revised definition of MSME, etc.
- List of announcements
The Finance Minister has also announced several relief under the Income-tax Act, which are given below:
- The rates of TDS/TCS in respect of specified payments/receipts shall be reduced by 25%. This concession in the rate shall be available for the tax deducted or collected between 14-05-2020 till 31-03-20 This relief shall not be available to a salaried and non-resident taxpayer. The tentative rates of TDS and TCS are specified in the below table.
- All pending refunds to a charitable trust and non-corporate businesses and professions shall be released
- The due date of all Income-tax return for the Financial Year 2019-20 will be extended from July 31, 2020, and October 31, 2020, to November 30,
- The due date for tax audit under section 44AB shall be extended from September 30, 2020, to October 31, 2020
- The last date for opting Vivad se Vishwas Scheme without paying an additional 10% of the disputed tax shall be extended till December 31, 2020
- The due date of 30-09-2020 for completion of assessments shall be extended to 31-12- Where assessments are getting barred on 31-03-2021, it shall be extended to 30- 09-2021.
By reducing the rate of TDS/TCS, the Govt. helps taxpayers to have more liquidity in their hands. In this difficult time, this announcement will benefit self-employed, professionals, and senior citizens earning interest income or rental income. It does not provide any relief to the salaried persons. However, it should be noted that the
relaxation in the rate of TDS/TCS will not have any impact on the ultimate tax liability of a taxpayer. Thus, any deficit in tax liability, due to a reduced rate of TDS/TCS, should be payable through advance-tax installments. Any short-fall in the deposit of advance- tax will attract interest under section 234B and 234C. The first installment of advance-tax is due on 15 June 2020. A taxpayer should re-calculate his advance-tax liability to be deposited next month to avoid any payment of interest.
- Tentative rates of TDS
| Section | Nature of Income | Rate of TDS applicable for the period | Threshold Limit for deduction tax | |
| 01-04-2020 to 13-05-2020 | 14-05-2020 to 31-03-
2021 | |||
| 193 | Interest on Securities | 10% | 7.50% | – |
| 194 | Dividend | 10% | 7.50% | Rs. 5,000 in case of Individual |
| 194A | Interest other than Interest on Securities | 10% | 7.50% | Rs. 5,000 to Rs. 50,000 |
| 194C | Payment to Contractors | – 1%: If the deductee is an individual or HUF
– 2%: In any other case | – 0.75%: If deductee is an individual or HUF
– 1.50%: In any other case | – Single payment: Rs. 30,000
– Aggregate payment: Rs. 100,000 |
| 194D | Insurance Commission | – 10%: If deductee is a domestic Company
– 5%: In any other case | – 7.50%: If deductee is a domestic Company
– 3.75%: In any other case | 15,000 |
| 194G | Commission and other payments on the sale of lottery tickets | 5% | 3.75% | 15,000 |
| 194H | Commission and Brokerage | 5% | 3.75% | 15,000 |
| 194-I | Rent | – 10%: If rent pertains to the hiring of immovable property
– 2%: If rent pertains to the hiring of plant and machinery | – 7.50%: If rent pertains to the hiring of immovable property
– 1.50%: If rent pertains to the hiring of plant and machinery | 2,40,000 |
| 194-IB | Payment of Rent by Certain Individuals or HUF | 5% | 3.75% | 50,000 |
| 194J | Royalty and Fees for Professional or Technical Services | – 2%: If royalty is payable towards sale, distribution or exhibition of cinematographic films
– 2%: If the recipient is engaged in the business of operation of call Centre – 2%: If the sum is payable towards fees for technical services (other than professional services) – 10%: In all other cases | – 1.50%: If royalty is payable towards sale, distribution or exhibition of cinematographic films
– 1.50%: If the recipient is engaged in the business of operation of call Centre – 1.50%: If the sum is payable towards fees for technical services (other than professional services) – 7.50%: In all other cases | – Director’s fees: Nil
– Others: Rs. 30,000 |
| 194M | Payment to the contractor, commission agent, broker, or professional by certain Individuals or HUF | 5% | 3.75% | 50 lakhs |
| 194N | Cash withdrawal | – 2%: In general if cash is withdrawn exceeds Rs. 1 crore
– 2%: If the assessee has not furnished return for last 3 assessment years and cash withdrawn exceeds Rs. 20 lakhs but does not exceed Rs. 1 crore – 5%: If theassessee has not furnished return for last 3 assessment years and cash withdrawn exceeds Rs. 1 crore | – 1.50%: In general if cash is withdrawn exceeds Rs. 1
crore – 1.50%: If assessee has not furnished return for last 3 assessment years and cash withdrawn exceeds Rs. 20 lakhs but does not exceed Rs. 1 crore – 3.75%: If assessee has not furnished return for last 3 assessment years and cash withdrawn exceeds Rs. 1 crore | – If a person defaults in filing of return: 20 lakhs
– If no default is made in filing of return: Rs 1 crore |
- Tentative rates of TCS
| Section | Goods & Services liable to TCS | Rate of TDS applicable for the period | |
| 14-05-2020 to 31-03-
2021 | 14-05-2020 – 31-03-
2021 | ||
| Section 206C(1) | Alcoholic liquor for human consumption | 1% | 0.75% |
| Section 206C(1) | – Timber obtained under Forest lease
– Timber obtained by any mode other than under a forest lease – Any other forest produce not being timber or tendu leaves | 2.50% | 1.875% |
| Section 206C(1) | Tendu leaves | 5% | 3.75% |
| Section 206C(1) | Minerals, being coal or ignite or iron ore | 1% | 0.75% |
| Section 206C(1) | Scrap | 1% | 0.75% |
| Section 206C(1C) | Parking Lot | 2% | 1.50% |
| Section 206C(1C) | Toll Plaza | 2% | 1.50% |
| Section 206C(1C) | Mining & quarrying | 2% | 1.50% |
| Section 206C(1F) | Motor Car | 1% | 0.75% |
| Section 206C(1G) | Overseas tour travel package | 5% | 3.75% |
| Section 206C(1G) | Remittance of Forex under LRS of Rs. 7 lakh or more in a financial year | § 0.5%: Where remittance is a repayment of loan obtained for the purpose of pursuing any education
§ 5%: In any other case | 0.375%: Where remittance is a repayment of loan obtained for the purpose of pursuing any education
§ 3.75%: In any other cases |
| Section 206C(1H) | Sale of goods in excess of Rs. 50 lakh | 0.10% | 0.075% |