TDS & TCS Existing & new
OF
FM
Press Confrence
Direct Tax
Rs 50,000 crores liquidity through TDS/TCS rate reduction
·
In
order to provide more funds at the disposal of the taxpayers, the rates of Tax
Deduction at Source (TDS) for non-salaried specified payments made to residents
and rates of Tax Collection at Source (TCS) for the specified receipts shall be
reduced by 25% of the existing rates.
·
•
Payment for contract, professional fees, interest, rent, dividend, commission,
brokerage, etc. shall be eligible for this reduced rate of TDS.
·
This
reduction shall be applicable for the remaining part of the FY 2020-21 i.e.
from tomorrow to 31st March, 2021.
·
This measure will release
Liquidity of Rs. 50,000 crore.
Existing & new reduced rates
Chart of reduced TDS/TCS rates for FY 2020-21 from 14.05.2020 to 31.03.2021
| S. No | Section of the Income-tax Act | Nature of Payment | Existing Rate of TDS | Reduced rate from 14/05/2020 to 31/03/2021 |
| 1 | 193 | Interest on Securities | 10% | 7.5% |
| 2 | 194 | Dividend | 10% | 7.5% |
| 3 | 194A | Interest other than interest on securities | 10% | 7.5% |
| 4 | 194C | Payment of Contractors and sub-contractors | 1% (individual/HUF)
2% (others) | 0.75% (individual/HUF)
1.5% (others) |
| 5 | 194D | Insurance Commission | 5% | 3.75% |
| 6 | 194DA | Payment in respect of life insurance policy | 5% | 3.75% |
| 7 | 194EE | Payments in respect of deposits under National Savings Scheme | 10% | 7.5% |
| 8 | 194F | Payments on account of re-purchase of Units by Mutual Funds or UTI | 20% | 15% |
| 9 | 194G | Commission, prize etc., on sale of lottery tickets | 5% | 3.75% |
| 10 | 194H | Commission or brokerage | 5% | 3.75% |
| 11 | 194-I(a) | Rent for plant and machinery | 2% | 1.5% |
| 12 | 194-I(b) | Rent for immovable property | 10% | 7.5% |
| 13 | 194-IA | Payment for acquisition of immovable property | 1% | 0.75% |
| 14 | 194-IB | Payment of rent by individual or HUF | 5% | 3.75% |
| 15 | 194-IC | Payment for Joint Development Agreements | 10% | 7.5% |
| 16 | 194J | Fee for Professional or Technical Services (FTS), Royalty, etc. | 2% (FTS, certain royalties, call centre) 10% (others) | 1.5% (FTS, certain royalties, call centre) 7.5% (others) |
| 17 | 194K | Payment of dividend by Mutual Funds | 10% | 7.5% |
| 18 | 194LA | Payment of Compensation on acquisition of immovable property | 10% | 7.5% |
| 19 | 194LBA(1) | Payment of income by Business trust | 10% | 7.5% |
| 20 | 194LBB(i) | Payment of income by Investment fund | 10% | 7.5% |
| 21 | 194LBC(1) | Income by securitisation trust | 25% (Individual/HUF) 30% (Others) | 18.75% (Individual/HUF) 22.5% (Others) |
| 22 | 194M | Payment to commission, brokerage etc. by Individual and HUF | 5% | 3.75% |
| 23 | 194-O | TDS on e-commerce participants | 1%
(w.e.f. 1.10.2020) | 0.75% |
2. Further, the rate of Tax Collection at Source (TCS) for the following specified receipts has also been reduced by 25% for the period from 14th May, 2020 to 31st March, 2021:
TCS Rate Chart for FY 2020-21 from 14.05.2020 to 31.03.2021
| S. No | Section of the Income-tax Act | Nature of Receipts | Existing Rate of TCS | Reduced rate from 14/05/2020 to 31/03/2021 |
| 1 | 206C(1) | Sale of | ||
| (a) Tendu Leaves | 5% | 3.75% | ||
| (b)Timber obtained under a forest lease | 2.5% | 1.875% | ||
| (c) timber obtained by any other mode | 2.5% | 1.875% | ||
| (d) Any other forest produce not being timber/tendu leaves | 2.5% | 1.875% | ||
| (e) scrap | 1% | 0.75% | ||
| (f) Minerals, being coal or lignite or iron ore | 1% | 0.75% | ||
| 2 | 206C(1C) | Grant of license, lease, etc. of (a) Parking lot | 2% | 1.5% |
| (b) Toll Plaza | 2% | 1.5% | ||
| (c) Mining and quarrying | 2% | 1.5% | ||
| 3 | 206C(1F) | Sale of motor vehicle above 10 lakhs | 1% | 0.75% |
| 4 | 206C(1H) | Sale of any other goods | 0.1% (w.e.f 01.10.2020) | 0.75% |
3. Therefore, TDS on the amount paid or credited during the period from 14th May, 2020 to 31st March, 2021 shall be deducted at the reduced rates specified in the table in para 1 above. Similarly, the tax on the amount received or debited during the period from 14th May, 2020 to 31st March, 2021 shall be collected at the reduced rates specified in the table in para 2 above.
4. It is further stated that there shall be no reduction in rates of TDS or TCS, where the tax is required to be deducted or collected at higher rate due to non-furnishing of PAN/Aadhaar. For example, if the tax is required to be deducted at 20% under section 206AA of the Income-tax Act due to non-furnishing of PAN/Aadhaar, it shall be deducted at the rate of 20% and not at the rate of 15%.
5. Legislative amendments in this regard shall be proposed in due course.
All
pending refunds to charitable trusts and noncorporate businesses &
professions including proprietorship, partnership, LLP and Co-operatives shall
be issued immediately.
Due date of all income-tax return for FY 2019-20 will be
extended from 31st July, 2020 & 31st October, 2020 to 30th November, 2020
and Tax audit from 30th September, 2020 to 31st October,2020.
Date
of assessments getting barred on 30th September,2020 extended to 31st
December,2020 and those getting barred on 31st March,2021 will be extended to
30th September,2021.
Period of Vivad se Vishwas Scheme for making payment
without additional amount will be extended to 31st December,2020
Rs 3 lakh crores Collateral-free Automatic Loans for Businesses, including MSMEs
# Businesses/MSMEs have been badly hit due to COVID19 need additional funding to meet operational liabilities built up, buy raw material and restart business
# Decision:
Emergency Credit Line to Businesses/MSMEs
from Banks and NBFCs up to 20% of
entire outstanding credit as on 29.2.2020
i. Borrowers with up to Rs. 25 crore outstanding and Rs. 100 crore turnover eligible
ii. Loans to have 4 year tenor with
moratorium of 12 months on
Principal repayment
iii.
Interest to be capped
iv.
100% credit guarantee
cover to Banks and NBFCs on principal and interest
v.
Scheme can be availed till 31st Oct 2020
vi. No guarantee fee, no fresh collateral
# 45 lakh units can
resume business activity and safeguard jobs
Rs 20,000 crores Subordinate Debt for Stressed
MSMEs
·
Stressed
MSMEs need equity support
·
GoI
will facilitate provision of Rs. 20,000 cr as subordinate deb
·
Two
lakh MSMEs are likely to benefit
·
Functioning
MSMEs which are NPA or are stressed will be
eligible
·
Govt.
will provide a support of Rs. 4,000 Cr. to CGTMSE
· CGTMSE will provide partial Credit Guarantee support to Banks
· Promoters of the MSME will be given debt by banks, which will then be infused by promoter as equity in the Unit.
Rs 50,000 cr. Equity
infusion for MSMEs through Fund of Funds
·
MSMEs face severe shortage of Equity.
·
Fund of Funds with Corpus of Rs 10,000 crores
will be set up.
·
Will provide equity funding for MSMEs with
growth potential and viability.
·
FoF will be operated through a Mother Fund and
few daughter funds
·
Fund structure will help leverage Rs 50,000 cr
of funds at daughter funds level
·
Will help to expand MSME size as well as capacity.
·
Will encourage MSMEs to get listed on main board
of Stock Exchanges.
New Definition of MSMEs
Low
threshold in MSME
definition
have created a fear
among MSMEs of graduating out of the
benefits and hence killing the urge to grow
There has been a long-pending demand for revisions.
Announcement:
·
Definition of MSMEs will be revised
·
Investment limit will be revised upwards
·
Additional criteria of turnover also being introduced.
·
Distinction between manufacturing and service
sector to be eliminated.
·
Necessary amendments to law will be brought about.
Existing vs. Revised
Existing MSME Classification
Criteria : Investment in Plant &
Machinery or Equipment
|
Classification |
Micro |
Small |
Medium |
|
Mfg. Enterprises |
Investment < RS 25 Lac |
Investment < RS. 5 Cr. |
Investment < RS. 10 Cr. |
|
Services Enterprise |
Investment < Rs. 10 Lac |
Investment< Rs. 2 cr. |
Investment < Rs. 5 Cr. |
Revised MSME Classification
Composite Criteria : Investment And Annual Turnover
|
Classification |
Micro |
Small |
Medium |
|
Manufacturing & Services |
Investment< Rs. 1 cr. and Turnover < Rs.5 cr. |
Investment< Rs. 10 cr. and Turnover < Rs.50 cr. |
Investment< Rs. 20 cr. and Turnover < Rs.100 cr. |
Global tenders to be disallowed upto Rs 200 crores
·
Indian MSMEs and other companies have often faced unfair
competition from foreign companies.
·
Therefore, Global tenders will be disallowed in
Government procurement tenders upto Rs 200 crores
· Necessary amendments of General Financial Rules will be effected.
· This will be a step towards Self-Reliant India and support Make in India
·
This will also help MSMEs to increase their business.
Other interventions for MSMEs
·
MSMEs
currently face problems of marketing and liquidity due to COVID
·
e-market
linkage for MSMEs to be promoted to act as a replacement for trade fairs and
exhibitions.
·
Fintech
will be used to enhance transaction based lending using the data generated by
the e- marketplace.
·
Government
has been continuously monitoring settlement of dues to MSME vendors from
Government and Central Public Sector Undertakings.
·
MSME
receivables from Gov and CPSEs to be released in 45 days
Rs. 2500 crore EPF Support for Business
& Workers for 3 more months
·
Businesses continue to face financial stress as
they get back to work.
·
Under Pradhan Mantri Garib Kalyan Package
(PMGKP), payment of 12% of employer and 12% employee contributions was made
into EPF accounts of eligible establishments.
·
This was provided earlier for salary months of
March, April and May 2020
· This support will be extended by another 3
months to salary months of June, July and August 2020
·
This will provide liquidity relief of Rs 2500 cr
to 3.67 lakh establishments and for 72.22 lakh
employees.
EPF contribution reduced for Business & Workers for 3 months- Rs
6750 crores Liquidity Support
·
Businesses need support to ramp up production
over the next quarter.
·
It is necessary to provide more take home salary
to employees and also to give relief to employers in payment of Provident Fund dues,
·
Therefore, statutory PF contribution of both
employer and employee will be reduced to 10% each from existing 12% each f or all
establishments covered by EPFO for next 3 months
·
CPSEs and State PSUs will however continue to
contribute 12% as employer contribution.
·
This scheme will be applicable for workers who
are not eligible for 24% EPF support under PM Garib Kalyan Package and its extension.
· This will provide relief to about 6.5 lakh establishments covered under EPFO and about 4.3 crore such employees. This will provide liquidity of Rs 6750 Crore to employers and employees over 3 months.
Rs 30,000 crore Special Liquidity Scheme
for NBFCs/HFCs/MFIs
·
NBFCs/HFCs/MFIs are finding it difficult to
raise money in debt markets.
·
Government will launch a Rs 30,000 crore Special
Liquidity Scheme
·
Under this scheme investment will be made in
both primary and secondary market transactions in investment grade debt paper
of NBFCs/HFCs/MFIs
·
Will supplement RBI/Government measures to
augment liquidity
·
Securities will be fully guaranteed by GoI
·
This will provide liquidity support for
NBFCs/HFC/MFIs and mutual funds and create confidence in the market
Rs 45,000 crore Partial Credit Guarantee Scheme 2.0 for NBFCs
·
NBFCs, HFCs and MFIs with low credit rating
require liquidity to do fresh lending to MSMEs and individuals
·
Existing PCGS scheme to be extended to cover
borrowings such as primary issuance of Bonds/ CPs (liability side of balance
sheets) of such entities
·
First 20% of loss will be borne by the Guarantor
ie., Government of India.
·
AA paper and below including unrated paper
eligible for investment (esp. relevant for many MFIs)
· This
scheme will result in liquidity of Rs 45,000
crores
Rs. 90,000 Cr. Liquidity Injection for DISCOMs
· Revenues of Power Distribution Companies (DISCOMs) have plummeted.
· Unprecedented cash flow problem accentuated by demand reduction
· DISCOM payables to Power Generation and Transmission Companies is currently ~ Rs 94,000 cr
· PFC/REC to infuse liquidity of Rs 90,000 cr to DISCOMs against receivables
· Loans to be given against State guarantees for exclusive purpose of discharging liabilities of Discoms to Gencos.
· Linkage to specific activities/reforms: Digital payments facility by Discoms for consumers, liquidation of outstanding dues of State Governments, Plan to reduce financial and operational losses.
· Central Public Sector Generation Companies shall give rebate to Discoms which shall be passed on to the final consumers (industries)
Relief to Contractors
· Extension of up to 6 months (without costs to contractor) to be provided by all Central Agencies (like Railways, Ministry of Road Transport & Highways, Central Public Works
Dept, etc)
1. Covers construction/ works and goods and services contracts
2. Covers obligations like completion of work, intermediate milestones etc. and extension of Concession period in PPP contracts
·
Government agencies to partially release bank
guarantees, to the extent contracts are partially completed, to ease cash flows
Extension of Registration and
Completion Date of Real Estate Projects under RERA
·
Adverse impact due to COVID and projects stand the
risk of defaulting on RERA timelines. Time lines need to be extended.
·
Ministry of Housing and Urban Affairs will
advise States/UTs and their Regulatory Authorities to the following effect:
1. Treat COVID-19 as an event of ‘Force Majeure’ under
RERA.
2. Extend the registration and completion date
suo-moto by 6 months for all registered projects expiring on or after 25th
March, 2020 without individual applications.
3. Regulatory Authorities may extend this for another
period of upto 3 months, if needed
4. Issue
fresh ‘Project Registration Certificates’ automatically with revised timelines.
5. Extend timelines for various statuary compliances
under RERA concurrently.
·
These measures will de-stress real estate
developers and ensure completion of projects so that homebuyers are able to get
delivery of their booked houses with new timelines.
Previous ………………………
Pradhan Mantri Garib Kalyan Package
Rs. 1.70 Lakh Crore relief package under Pradhan
Mantri Garib Kalyan Yojana for the poor to help them fight the battle against
Corona Virus:
·
Insurance cover of Rs 50 Lakh per health worker
·
80 crore poor people given benefit of 5 kg wheat
or rice per person for next 3 months
·
1 kg pulses for each household for free every
month for the next 3 months
·
20 crore women Jan Dhan account holders get Rs
500 per month for next 3 months
·
Gas cylinders, free of cost, provided to 8 crore
poor families for the next 3 months
·
Increase in MNREGA wage to Rs 202 a day from Rs
182 to benefit 13.62 crore families
·
Ex-gratia of Rs 1,000 to 3 crore poor senior
citizen, poor widows and poor Divyang
·
Front-loaded Rs 2,000 paid to farmers under
existing PM-KISAN to benefit 8.7 crore farmers
·
Building and Construction Workers Welfare Fund
allowed to be used to provide relief to workers
·
24% of monthly wages to be credited into their
PF accounts for next three months for wage-earners below Rs 15,000 p.m. in
businesses having less than 100 workers
·
Five crore workers registered under Employee
Provident Fund EPF to get non- refundable advance of 75% of the amount or three
months of the wages, whichever is lower, from their accounts
·
Limit of collateral free lending to be increased
from Rs 10 to Rs 20 lakhs for Women Self Help Groups supporting 6.85 crore households.
·
District Mineral Fund (DMF) to be used for
supplementing and augmenting facilities of medical testing, screening etc
Other Measures
· On the request of the Government of India, RBI raised the Ways and Means advance limits of States by 60% and enhanced the Overdraft duration limits.
· Issued all the pending income-tax refunds up to ₹5 lakh, immediately benefiting around 14 lakh taxpayers
· Implemented “Special Refund and Drawback Disposal Drive” for all pending refund and drawback claims
· • Both the above measures amount to ₹18,000 crore of refund.
· Sanctioned Rs 15,000 crores for Emergency Health Response Package
·
Provided
Relaxation in Statutory and Compliance matters, such as –
• Extending last date for Income Tax Returns to June 30, 2020
• Extending filing GST returns to end of June 2020
• 24*7 custom clearance till 30th June, 2020
• Relaxation for 3 months for debit cardholders to withdraw cash free from any ATMs, etc
• Allowing payment before 15 May, 2020 for Motor Vehicle and Health Insurance Policies
• Mandatory Board meetings extended by 60 days till 30 September
Reserve Bank of India Measures
·
Reduction of Cash Reserve Ratio (CRR) has
resulted in liquidity enhancement of
₹1,37,000 crores
·
Targeted Long Term Repo Operations (TLTROs) of ₹1,00,050
crore for fresh deployment in investment grade corporate bonds, commercial
paper, and non- convertible debentures.
·
TLTRO of Rs.50,000 crore for investing them in
investment grade bonds, commercial paper, and non-convertible debentures of
NBFCs, and MFIs.
·
Increased the banks’ limit for borrowing
overnight under the marginal standing facility (MSF), allowing the banking
system to avail an additional ₹1,37,000 crore of liquidity at the reduced
MSF rate.
·
Announced special refinance facilities to
NABARD, SIDBI and the NHB for a total
amount of ₹50,000 crore at the policy repo rate
·
Announced the opening of a special liquidity
facility (SLF) of ₹50,000 crore for mutual funds to alleviate intensified liquidity pressures
·
Moratorium of three months on payment of
instalments and payment of Interest on Working Capital Facilities in respect of
all Term Loans
·
Easing of Working Capital Financing by reducing margins
·
For loans by NBFCs to commercial real estate
sector, additional time of one year has been given for extension of the date
for commencement for commercial operations (DCCO)
Source
:- Press Conference Presentatiom
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