Economy

TDS rate-cut for salaried class means higher compliance: Finance Secretary

Our Bureau New Delhi | Updated on May 14, 2020 Published on May 14, 2020

Ajay Bhushan Pandey, Revenue Secretary (file photo)   -  Kamal Narang

The Finance Ministry, on Thursday, clarified that there is no reduction of Tax Deducted at Source (TDS) for the salaried class, as it would have increased compliance for Income-Tax assessees. Also, this reduction will not be available on remittances sent abroad by individuals.

Finance Secretary Ajay B Pandey, who is also Revenue Secretary, said that salaried persons take the benefits of various tax saving provisions. Based on the declaration of the employees, the employer ensures TDS. At the end of year, like all other assessees, the salaried class, too, file the returns and, accordingly, tax compliance for the full financial year is recorded. Now, if there is a change after the declarations are made and tax deduced at different rates, it will increase the compliance. Keeping this in mind, salaried tax payers have been kept out of reduced TDS rate.

Economic measures

As a part of economic measures, the government announced reduction in the rates of Tax Collection at Source (TCS) and Tax Deduction at Source (TDS) for the non-salaried specified payments made to residents by 25 per cent for the period between May 14, 2020, and March 31, 2021. This move expected to bring ₹50,000 crore to such individuals.

TDS refers to deducting tax at certain rate before the payment. It is the responsibility of the buyer or payment maker to deduct tax and deposit with the government. On the other hand, TCS refers to collection of tax at a certain percentage on payment received. It is the responsibility of the person receiving payment or sellers to collect TCS and deposit it with the government. TDS will be applicable for professionals getting some money for providing service, while TCS will be applicable at the time of purchase of gold or silver. Rate of TDS/TCS varies between 0.1 to 30 per cent.

As of now, 23 categories of payments attract TDS, while there are four categories of receipts for TCS.

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

Published on May 14, 2020
This article is closed for comments.
Please Email the Editor