NEW ECONOMIC PACKAGE W.R.T DIRECT TAX

NEW ECONOMIC PACKAGE W.R.T DIRECT TAX

_{[Applicable from MAY 14th 2020]}

Ques 1: Why this post?

Ans: Economic package announcements have been made by the Finance Minister of India by addressing a press conference on May, 13^th 2020 in relation to Direct taxation amongst others. Thus this post is to analyse those aspects and specially with respect to TDS provisions.

Ques 2: What are the key changes announced w.r.t. Direct Tax laws ?

Ans: Following are the several relief announced:

1)     All pending refunds to charitable trust and non-corporate businesses and professions, partnerships, LLP and co-operative societies shall be released soon.

2)     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 31-03-2021. This relief shall not be available to a salaried and non-resident taxpayer.

3)     The last date for opting Vivad se Vishwas Scheme without paying additional 10% of the disputed tax shall be extended till December 31, 2020.

Following due dates have been changed:

Compliance	Existing Dates	Extended Date
Income-tax return (FY19-20)	July 31, 2020 and October 31, 2020	November 30, 2020
Tax Audit (FY19-20)	September 30, 2020	October 31, 2020
Completion of assessments	September 30, 2020	December 31, 2020
Completion of assessments	March 31, 2021	September 30, 2021

Ques 3: Is benefit of Reduced TDS applicable in all cases?

Ans: Reduction in rate of TDS is not available in following situations:

1)     Where tax is deductible from salary or provident fund under Section 192 or Section 192A respectively.

2)     Where the sum is paid or payable to a non-resident person.

3)     Where a resident person does not furnish his PAN or Aadhaar and the tax is deductible at a higher rate under Section 206AA or Section 206CC, as the case may be

4)     Where tax is deductible from any sum not being in the nature of payment for a contract, professional fees, interest, rent, dividend, commission, or brokerage.

Ques 4: Any point which is important while availing reduced TDS Rates Benefit?

Ans: 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 reduced rate of TDS/TCS, should be payable through advance-tax instalments. Any short-fall in the deposit of advance-tax will attract interest under section 234B and 234C.

Ques 5: Please give a bird eye view of TDS Rates.

Ans:

		Rate of TDS applicable for the period
Section	Nature of Income	01-04-2020 to 13-05-2020	14-05-2020 to 31-03-2021	Threshold Limit for deduction tax
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 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 domestic Company -   5%: In any other case	-   7.50%: If deductee is domestic Company -   3.75%: In any other	15000
194G	Commission and other payments on sale of lottery tickets	5%	3.75%	15000
194H	Commission and Brokerage	5%	3.75%	15000
194-I	Rent	-  10%: If rent pertains to hiring of immovable property -  2%: If rent pertains to hiring of plant and machinery	-  7.50%: If rent pertains to hiring of immovable property -  1.50%: If rent pertains to hiring of plant and machinery	240000
194-IB	Payment of Rent by Certain Individuals or HUF	5%	4%	50000
194J	Royalty and Fees for Professional or Technical Services	-  2%: If royalty is payable towards sale, distribution or exhibition of cinematographic films -  2%: If recipient is engaged in business of operation of call Centre -  2%: If 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 recipient is engaged in business of operation of call Centre -  1.50%: If 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 contractor, commission agent, broker or professional by certain Individuals or HUF	5%	4%	50 lakhs
194N	Cash withdrawal	-  2%: In general if cash withdrawn exceeds Rs. 1 crore -  2%: 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 -  5%: If assessee has not furnished return for last 3 assessment years and cash withdrawn exceeds Rs. 1 crore	-  1.50%: In general if cash 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

Ques 5: Please give a bird eye view of TCS Rates.

Ans:

Section	Goods & Services liable to TCS	Rate of TDS applicable for the period
		01-04-2020 to 13-05- 2020	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 case
Section 206C(1H)	Sale of goods in excess of Rs. 50 lakh	0.10%	0.075%