25% reduction in TDS (tax cut at source) and TCS (tax collection at source) rates in the recently introduced relief package by Finance Minister Nirmala Sitharaman to make India and the Indian economy self-reliant amid the corona virus epidemic. Has been announced to do. This rebate will be granted throughout the financial year 2020-21. Many people have not yet understood what they will benefit from the reduced rate of TDS and TCS. So let us tell you today what has been announced in the Relief Package related to TDS and TCS and how will you benefit from it.
Whenever a payment is made, TDS is deducted on that payment. TDS is deducted for salaried individuals based on their taxable income. At the same time TDS is deducted at the rate of 10 percent on non-paid payments. TDS is deducted on salary, interest on bank deposits, income from investment, professional fees, commission or brokerage income on investment in stock market, etc.
However, the Finance Minister has clarified in his relief package that the 25% discount in the rate of TDS and TCS is for non-paid payments only.
Under the Income Tax Rules, it is mandatory for every company to deduct TDS on payment and submit it to the Income Tax Department. Based on your salary and annual investment information, companies deduct TDS from the monthly salary of employees and submit it to the department.
At the time of any transaction, when the payment is taken, the seller collects the tax in the price of the goods and products and collects the money from the customer. This is called tax collection at source. The amount of this tax has to be deposited by the seller with the Income Tax Department later. Vendors, vendors or shopkeepers charge TCS, such as a gold blindsmith.
TDS: This is called tax deduction at source. Suppose you serve someone and get paid in return. In this case, the paying person deducts 10 percent of the total payment to you and makes the remaining payment. This 10 percent amount is called TDS, which is deposited with the Income Tax Department. At the end of the financial year, when you file your annual income tax return, then the mentioned TDS deducted in it is mentioned. If you have given more tax than your income then you can claim refund. TDS is applicable on salary, contract, rent, professional fees etc.
TCS: The tax that is collected from the source. It is charged by the seller at a fixed rate on the total price of the product. TCS carries liquor, persimmon, wood, scrap, vehicles and gold jewelery. This tax has to be collected by the seller and deposited with the Income Tax Department and then adjusted by filling the annual return.
With the Finance Minister cutting the rates of TDS and TCS by 25 percent, people will now have additional money. TDS which used to be deducted at the rate of 10 percent, will now be cut at the rate of 7.5 percent. Similarly, TCS used to charge different products and services at different rates, now it will also be charged at a lower rate, so customers will have to pay less in the form of tax, that is, the products will get cheaper.
This post was published on May 19, 2020 10:45 pm
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