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TDS, TCS rates on interest, dividend, other non-salary payments effective April 1, 2021

TDS, TCS rates on interest, dividend, other non-salary payments effective April 1, 2021

In May 2020, the government reduced TDS and TCS rates for interest income, dividend income, rent payments and other non-salary payments by 25%. This was done to increase liquidity in the hands of individuals, especially those going through financial hardships caused by the coronavirus-induced lockdown. The reduction in TDS and TCS rates on non-salary payments came into effect on May 14, 2021, and will be applicable till March 31, 2021.

Thus, effective from April 1, 2021, the TDS and TCS rates on these non-salary payments will be back to their original (higher) levels.

This would mean that, for instance, if the interest paid on a bank FD exceeds Rs 40,000 between April 1, 2021, and March 31, 2022, then the bank would deduct tax on the interest paid at the rate of 10% instead of 7.5% in the previous financial year 2020-21.

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