What Does Reduction Of TDS And TCS Rates Mean For You?

Find out how the reduction of TDS and TCS rates impact the taxpayer.

The Finance Minister Nirmala Sitharaman has reduced TDS (tax deduction at source) rates for non-salaried specified payments and the TCS (tax collection at source) rates by 25 percent

New Delhi: The Centre on Wednesday announced a slew of measures based on the allocated 20 lakh crore that the Prime Minister had announced during his address to the nation on Tuesday. One of the steps that were taken was to increase money in the taxpayers' hands. The Finance Minister Nirmala Sitharaman has reduced TDS (tax deduction at source) rates for non-salaried specified payments and the TCS (tax collection at source) rates by 25 percent. The rates will be applicable from 14 May 2020, Thursday, and be valid till March 31, 2021. What is TDS? TDS is the ‘tax deducted at source’ which any company or an individual will deduct while making payments that exceed a certain threshold. The party that deducts the tax is the ‘deductor’ and it is their responsibility to cut TDS from the payment. It is deducted irrespective of the mode of payment and it applies to a range of payments such as salaries, professional fees, etc. What is TCS? The TCS is a tax that a seller pays and which the seller charges from a buyer during a sale. There is a section in the Income-tax act i.e.  Section 206C that gives details on the goods on which a seller must collect tax from the buyer. These include liquor, purchasing a vehicle that exceeds Rs. 10 Lakhs, etc. According to Sitharaman, this reduction will place more funds in the hands of the taxpayers. During the press conference which was held yesterday at 4 PM to announce the disbursal of the economic package she had said, “The government will infuse Rs 50,000 crores liquidity by reducing rates of TDS, for non-salaried specified payments made to residents, and rates of Tax Collection at Source for specified receipts, by 25 percent of the existing rates." The deadline for salaried individuals to file Income Tax Return (ITR) has also been extended to November 30. Also Watch: