First tranche of measures under the Atma Nirbhar Bharat economic stimulus package announced on Wednesday featured a few sections dedicated to taxpayers. These included reduction in rates for TDS and TCS, to extension of compliance dates for income tax returns, and prompt tax refunds. These steps are meant to provide more liquidity to taxpayers, one of the key points PM Narendra Modi had touched while announcing the second economic package worth Rs 20 lakh crore. He had promised that the upcoming package will have provisions to help every strata of the society and all sectors of the economy, while making India self-reliant.
TDS, TCS rate reduction
Finance Minister Nirmala Sitharaman announced that Tax Deducted at Source (TDS) for specific non-salaried payments and Tax Collection at Source (TCS) for specific receipts will be reduced by 25 per cent of the existing rates. Declaring the first tranche of measures under Atma Nirbhar Bharat stimulus package, Sitharaman said that the rate reduction will remain in effect for the rest of financial year 2020-21, that is, from tomorrow till March 31, 2021.
Payment for contract, professional fees, interest, rent, dividend, commission, brokerage, etc shall be eligible for this reduced rate of TDS, FM Sitharaman said. Government expects that the reduction in TDS and TCS rates will help put Rs 50,000 crore in the hands of the people in the form of liquidity, which they otherwise would have paid as tax, she further added.
In other tax-related measures, FM Sitharaman also announced that due date for filing all income tax returns for FY 2019-20 has been extended from July 31, 2020 and October 31, 2020 to November 30, 2020. Tax audit will happen between September 30, 2020 and October 31, 2020. Period of Vivad se Vishwas Scheme for settling direct tax disputes without additional payments will be extended to December 31, 2020. Date of assessments getting barred on September 30, 2020 has been extended to December 31, 2020, and those getting barred on March 31, 2021 will be extended to September 30, 2021.
All pending refunds to charitable trusts and non-corporate businesses professions, including proprietorship, partnership, LLP and Co operatives, will be issued immediately, the Finance Minister further said.