Direct Taxation and EPF related Measures as a part of Fiscal Stimulus
PM Modi addressed the nation on Covid-19 crisis and the ongoing lockdown situation five days before the termination date of Lockdown 3.0. He announced an extension of lockdown. He also announced a Rs. 20 Lakh Crore fiscal stimulus for businesses and people at large and said that the details regarding the same will follow soon.
A day after MP Modi’s speech, Finance Minister Nirmala Sitharaman addressed a press conference to provide further details on the fiscal stimulus package. The package has come with reforms in many areas such as Income Tax, EPF, benefits for MSMEs and poorer section of the country. In this article we will focus on Income Tax and EPF related changes.
Income Tax related Measures:
TDS Rates Applicable from 14/05/2020 to 31/03/2021
| Section | Nature of Payment | Existing Rate | Reduced Rate | |
|---|---|---|---|---|
| 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 | Individual/HUF | 1% | 0.75% |
| Others | 2% | 1.5% | ||
| 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 | Commission, prize etc., on sale of lottery tickets | 5% | 3.75% | |
| 194G | Payments on account of re-purchase of Units by Mutual Funds or UTI | 20% | 15% | |
| 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. | FTS, certain royalties, call centre | 2% | 1.5% |
| Others | 10% | 7.5% | ||
| 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 In- vestment fund | 10% | 7.5% | |
| 194LBC(1) | Income by securitization trust | Individual/HUF | 25%% | 18.75% |
| Others | 30% | 22.5% | ||
| 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% | |
TCS Rates Applicable from 14/05/2020 to 31/03/2021
| Section | Nature of Payment | Existing Rate | Reduced Rate | |
|---|---|---|---|---|
| 206C(1) | Sale of… | |||
| (a) | Tendu Leaves | 5% | 3.75% | |
| (b) | Timber obtained under a forest lease | 2.5% | 1.875% | |
| (c) | Timber obtained by any other mode | 2.5% | 1.875% | |
| (d) | Any other forest produce not being timber/tendu leaves | 2.5% | 1.875% | |
| (e) | Scrap | 1% | 0.75% | |
| (f) | Minerals, being coal or lignite or iron ore | 1% | 0.75% | |
| 206C(1C) | Grant of license, lease, etc. of… | |||
| (a) | Parking lot | 1% | 1.5% | |
| (b) | Toll Plaza | 1% | 1.5% | |
| (c) | Mining and quarrying | 1% | 1.5% | |
| 206C(1F) | Sale of motor vehicle above 10 lakhs | 1% | 0.75% | |
| 206C(1H) | Sale of any other goods | 0.1% (w.e.f 01.10.2020) | 0.75% | |
Note: It is further stated that there shall be no reduction in rates of TDS or TCS, where the tax is required to be deducted or collected at higher rate due to non-furnishing of PAN/Aadhaar. For example, if the tax is required to be deducted at 20% under section 206AA of the Income-tax Act due to non-furnishing of PAN/Aadhaar, it shall be deducted at the rate of 20% and not at the rate of 15%.
Extension in Income Tax Return Filing Due Date:
| Old Date | Extended Date | |
|---|---|---|
| 31st July 2020 | 30th November 2020 | |
| 31st October 2020 | ||
| 30th September 2020 (Audit Report) | 31st October 2020 | |