The government has reduced TDS and TCS rates for interest, dividend, rent payments and other non-salaried payments by 25 % with effect from May 14, 2020 for the current financial year in order to provide some relief to businesses helping them fight back and revive from the impact of the nation-wide lockdown due to the unprecedented outbreak of the novel Coronavirus.
The reduced rates as notified by the IT Department are as follows:
| S. No | Section of the IT Act | Nature of Payment | Existing Rate of TDS | Reduced rate from 14/05/2020 |
| 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 Savings Scheme | 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 of 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% |
CA Anu Batra, Direct Taxes Expert at DBC believes that the steps which are being taken by the government were much needed in order to give the businesses the power to bear the loss of income due to the nation-wide lockdown.
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