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December 29, 2021
TDS Rate Chart for FY 2020-21 (AY 2021-22)
On 1st February 2020, Finance Minister Nirmala Sitharaman presented the Union Finance Budget, 2020. By amending Section 194 of the Income-tax Act, the threshold limit for deduction of tax at source (TDS) on interest income, other than the interest on securities, paid by a banking company, co-operative society or a post office was raised from Rs 10,000 to Rs 40,000. The interest earned from bank fixed deposits, or recurring deposits and even term deposits in the post office remained taxable as per one’s income slab but TDS rates limit was increased.
In Budget 2020, Section 194J was amended, whereby TDS Rate on Technical services to be reduced to 2% from current 10%. While Introduction of section 194O was made where by TDS to be deducted by E-Commerce operator for sale of goods or provision of service facilitated by it through its digital or electronic facility or platform. Not only this but also in Budget 2020, section 194K was introduced where by person responsible for paying to a resident any income in respect of units of a Mutual Fund would deduct TDS.
Table of Content
What is TDS?
The TDS stands for tax deducted at source. As per the Income Tax Act, any company or person making a payment is required to deduct tax at source if the payment exceeds certain threshold limits. TDS has to be deducted at the rates prescribed by the tax department.
Know more about TDS returns, Read: An informative guide on How to make TDS payment?
Important Updates on TDS rates
Updates on TDS rate changes as announced by FM under Atma Nirbhar Bharat Abhiyan:
To revive the economy and help the taxpayers while the COVID 19 crisis is prevailing in India, the FM Minister on 13th may 2020 announced new TDS rates by reducing 25% for non-salaried section. This reduction shall be applicable for the remaining part of the FY 2020-21. These new rates will be in force from the 14th of May, 2020 to 31st March 2021.
Payment for contract, professional fees, interest, rent, dividend, commission, brokerage, etc. shall be eligible for this reduced rate of TDS.
That means if you were liable to pay TDS at the rate of 10% earlier now you will have to pay the TDS at the rate of 7.5% only.
Revised and reduced TDS Rate Chart For Financial Year 2020-21 and Assessment Year 2021-22
Section of the Income-tax Act |
Nature of Payment |
Existing Rate of TDS |
Reduced rate from 14/05/2020 to 31/03/2021 |
193 |
Interest on Securities |
10% |
7.5% |
194 |
Dividend |
10% |
7.5% |
194A |
Interest other than interest on securities |
10% |
7.5% |
194C |
Payment of Contractors and sub-contractors |
1% (individual/HUF)2% (others) |
0.75% (individual/HUF)1.5% (others) |
194D |
Insurance Commission |
5% |
3.75% |
194DA |
Payment in respect of life insurance policy |
5% |
3.75% |
194EE |
Payments in respect of deposits under National Savings Scheme |
10% |
7.5% |
194F |
Payments on account of re-purchase of Units by Mutual Funds or UTI |
20% |
15% |
194G |
Commission, prize etc., on sale of lottery tickets |
5% |
3.75% |
194H |
Commission or brokerage |
5% |
3.75% |
194-I(a) |
Rent for plant and machinery |
2% |
1.5% |
194-I(b) |
Rent for immovable property |
10% |
7.5% |
194-IA |
Payment for acquisition of immovable property |
1% |
0.75% |
194-IB |
Payment of rent by individual or HUF |
5% |
3.75% |
194-IC |
Payment for Joint Development Agreements |
10% |
7.5% |
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) |
194K |
Payment of dividend by Mutual Funds |
10% |
7.5% |
194LA |
Payment of Compensation on acquisition of immovable property |
10% |
7.5% |
194LBA(1) |
Payment of income by Business trust |
10% |
7.5% |
194LBB(i) |
Payment of income by Investment fund |
10% |
7.5% |
194LBC(1) |
Income by securitisation trust |
25% (Individual/HUF)30% (Others) |
18.75% (Individual/HUF)22.5% (Others) |
194M |
Payment to commission, brokerage etc. by Individual and HUF |
5% |
3.75% |
194-O |
TDS on e-commerce participants |
1%(w.e.f. 1.10.2020) |
0.75% |
Further it was said that the rates of TDS are after considering cess @4% and shall be increased by applicable surcharge.
Download Revised TDS Chart schedule for FY 2020-21 (AY 2021-22) PDF.
An informative read: Income Tax slab rates for FY 2020-21
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Thanks for such detailed & usiful informatiom. I would be grateful if you kindly reply to the following two queries. ( I am a Sr. Citizen with a income of less than Rs. three lakhs.) 1. In the current year FY 2019-20 (AY 2020-21) income from interest on Fds in banks and post office upto 50,000 is exempt from tax. Whether this will continue in the next year (Fy 2020-21 Ay 2021-22) also. 2. In current year if the FD interest in banks and post office is less than 50,000 there is no TDS and no form 15 H is required. Only when the amount exeeds 50,000 form 15H is to be submitted to avail TDS exemption. Kindly reply. Thanks
Thank you for your message.Kindly get in touch with us on 9643203209 or email info@ebizfiling.com with your query. Team will get in touch with you.
1.WHETHER TDS IS APPLICABLE TO A COOP SOCIETY WHICH HAS KEPT ITS DEPOSIT WITH A COOP URBAN BANK?
2.WHETHER IT IS APPLICABLE TO A COOP SOCIETY WHICH ACCEPTS DEPOSIT FROM
ITS MEMBERS/ACCOUNT HOLDERS/?
3.194 N TDS ON CASH WITHDRAWALS. IS ANY CHANGE IS MADE IN FINANCE ACT 2020?
What gets covered under technical service for 194J