New TDS rates with effect from 14.05.2020
To increase liquidity the Government has reduced TDS rates by 25%. The new rates effective from May 14, 2020 will remain effective till March 31, 2021.
To increase liquidity in the hands of the common man and battle covid-induced financial distress, the government announced various relief measures on 13 May 2020. One of these was a reduction in the tax deducted at source (TDS) and tax collected at source (TCS) rates by 25 per cent on non-salaried payments.The TDS on salaries payments continue to be the same.
The new rates has come into effect from May 14, 2020 and remain effective till March 31, 2021, i.e., till the end of the financial year 2020-21
Thus, where the transactions are entered and bill is raised before May 14, 2020, old rate of TDS and TCS will be applicable and all the transactions which will be entered on after May 14, 2020 reduced rate of TDS and TCS will be applicable.
It is important to note that only TDS rates have been reduced, the year end tax liability remains the same. Lower rates of TDS will translate into higher advance tax liability and non payment of advance tax will result in increased interest liability.
(Contributed by Roshan Thomas,FCA)