The Union government lowered the tax deducted at source (TDS) and tax collected at source (TCS) rates by 25 per cent on non-salaried payments effective from May 14, 2020, until March 31, 2021. The government undertook the decision to provide additional liquidity to people by lowering tax rates.
To increase liquidity in the hands of people and help them fight the coronavirus-induced recession, the government announced various relief measures on May 13, 2020. Non-salaried payments include interest earned on fixed deposits (FDs), dividend income, among other income sources. TDS kicks in at different levels for various payments.
The relief measures were announced by finance minister Nirmala Sitharaman.
TDS on FD interest paid by a bank will now be deducted at 7.5 per cent instead of 10 per cent earlier. Similarly, a tenant will be required to deduct the TDS on rent exceeding ₹ 50,000 per month at 3.75 per cent instead of 5 per cent earlier.
Now with the 2021-22 budget scheduled to be presented by Ms Sitharaman on February 1, taxpayers are hoping for additional relief measures to help survive the Covid-19-induced recession hit economy.