New Delhi: Finance Minister Nirmala Sitharaman on Wednesday announced new tax measures according to which, the taxpayers who have not furnished Pan or Aadhaar numbers while filing tax returns will not get the benefit of lower rates of Tax Collection at Source (TCS) and Tax Deduction at Source (TDS).
As part of Rs 20 lakh Cr economic package, Finance minister Nirmala Sitharaman on Wednesday announced reduced TDS/TCS for the non-salaried specified payments made to residents by 25 per cent for balance period of Financial Year 2020-21. This was done to provide more money into the hands of the taxpayers to deal with the economic situation amid Covid-19 pandemic.
However, the government has clarified that reduced rates would not be applicable to tax payers who have been denied lower rates (of TCS/TDS) due to non-furnishing of PAN/Aadhaar.
The tax is required to be deducted at a rate of 20 per cent or higher for this category of taxpayers as per the provisions of section 206 AA of the Income-tax Act.
As per the government announcement, the reduced rate of TDS will be applicable to payment for contract, professional fees, interest, rent, dividend, commission, brokerage. The new lower rates of TDS and TCS will be effective for the remaining part of the FY 2020-21 i.e. from Thursday 14 May 2020 to 31 March 2021.
TCS is applicable on sale of Tendu Leaves, timber obtained under a forest lease, any other forest produce, scrap, minerals, grant of licence, lease of parking lots, mining and quarrying, sale of motor vehicles, above rates of Rs 10 lakh. The rate of TDS ranges between 1 per cent and 30 per cent depending on the source of income, while the rate of TCS ranges between 0.10 per cent and 5 per cent.
(With inputs from IANS News Agency)