On 1st February 2020, the Finance Minister Nirmala Sitharaman presented the Union Finance Budget, 2020. By amending Section 194 of the Income-tax Act, the threshold limit for deduction of tax at source (TDS) on interest income, other than the interest on securities, paid by a banking company, co-operative society or a post office was raised from Rs 10,000 to Rs 40,000. The interest earned from bank fixed deposits, or recurring deposits and even term deposits in post office remained taxable as per one’s income slab but TDS rates limit was increased.
As per Budget 2020, Section 194J was amended by decreasing the TDS rate on technical services to 2%. Similarly introduction of section 194O where E-Commerce operators will have to deduct tax for sale or provision of goods facilitated through digital platform. In addition , person responsible paying any income in respect units Mutual Fund would also be deducted as taxes under new 1990 deduction limit .
The TDS stands for tax deducted at source. As per the Income Tax Act, any company or person making a payment is required to deduct tax from their payments if they exceed certain limit values and rates prescribed by Department of Revenue & Industries (DRI).
TDS rates will soon change under the Atma Nirbhar Bharat Abhiyan.
The new TDS rate structure is as follows:
The FM Minister announced new TDS rates, which will be in force from May 2020 to March 2021. This reduction is expected to revive the economy and help taxpayers during COVID 19 crisis. The 25% cut given on non-salaried section of income earners has been made applicable for the remaining part of the fiscal year 2020 -21
This decision aims at reviving the Indian economy by helping out taxpayers who are currently suffering due to high inflation rates faced across India as well other countries worldwide