Tax Deducted at Sources Amendment made by Finance Act in TDS applicable from 01st -April-2020 ||Tax Collected at Sources (TCS) With effect from 01-10-2020

Tax Deducted at Sources Amendment made by Finance Act in TDS applicable from 01^st -April-2020

TDS (Tax Deducted at Sources) [Chapter – XVIIB]

TDS on payment of Dividend [section 194 and 195 of Income Tax Act ]: With effect from 01^st -April-2020.

Indian company shall be liable to deduct TDS @ 10% under section 194 if the aggregate of the amount of dividend exceed ₹ 5000/- and dividend is payable to resident in India.

However, TDS shall be deducted @ 20% under section 195 without any threshold limit if the amount of dividend is payable non-resident or foreign company. However, the provision of the DTAA shall be applicable if beneficial to the assesses.

Therefore, income of the dividend shall be taxable in the hand of recipient with effect from 01-04-2020 and liable to tax as per normal provision of the Act.

TDS on Fee for professional or technical services [section 194J Income Tax Act]: effect from 01^st -April-2020.

The rate of TDS has reduced to 2% from existing 10% under section 194J in respect of –

• Fee for technical services;
• Royalty in the nature of consideration for sales, distribution or exhibition of cinematographic films.

TDS on Dividend on Units [section 194K Income Tax Act]: With effect from 01-04-2020.

TDS shall be deducted under section 194K @ 10% under section 194 on dividend from units if the aggregate of the amount of dividend exceed Rupees 5000/- and dividend is payable to resident in India.

However, TDS shall be deducted @ 20% under section 195 without any threshold limit if the amount of dividend is payable to non-resident or foreign company. However, the provision of the DTAA shall be applicable if beneficial to the assesse.

Therefore, income of the dividend shall be taxable in the hand of recipient with effect from 01-04-2020 and liable to tax as per normal provision of the Act.

TDS on payment of Cash [section 194N]: with effect from 01^st -July-2020.

To expend the scope of Section 194N, the threshold limit for deduction of tax on cash withdrawal from a Bank or a Post Office reduced from ₹ 1 crore to Rupees 20 lakh if the person, has not filed return of income for three previous years immediately preceding the previous year in which cash is withdrawn, and the due date for filing ITR under section 139(1) of Income tax Act has expired. The deduction of tax under this situation shall be at the rate of:

2% from the amount withdrawn in cash if the aggregate of the amount of withdrawal exceeds Rupees 20 lakhs during the previous year; or

5% from the amount withdrawn in cash if the aggregate of the amount of withdrawal exceeds ₹ 1 crore during the previous year.

In the above situation, the tax shall be deducted on the amount exceeding Rupees 20 lakhs or Rupees 1 crore, as the case may be.

TDS on payment made by e-commerce operator to e-commerce participant [section 194O]: With effect from 01^st -Oct-2020:-

under section 194O, TDS @ 1% on the amount payable for sales of goods or provision of services by the e-commerce operator while making the payment to the e-commerce participant.

However, No TDS shall be deducted if the aggregate the amount payable to an individual or HUF does not exceed Rupees 5 Lakh and such e-commerce participant has furnished his (PAN)Permanent Account Number or Aadhaar number to the e-commerce operator.

Tax Collected at Sources (TCS) [section 206C] With effect from 01-10-2020

TCS of foreign remittance With effect from 01-10-2020

TCS @ 5% shall be collect by an authorised dealer on the aggregate amount of remittance outside India exceeding Rupees 7,00,000/- during the financial year by any person.

TCS on remittance for purchases of foreign tour package With effect from 01-10-2020

TCS @ 5% shall be collect by a seller of an overseas tour program package on the receipt of any amount from a buyer of such package.

TCS on sales of goods With effect from 01-10-2020

TCS @ 0.1% shall be collect by a seller on the aggregate sales consideration for goods exceeding Rupees 50 Lakh during the previous year.

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