Changes in TDS provisions by Finance Act, 2020

1. TDS PROVISIONS
Changes by Finance Act, 2020
Presented by- CA Saloni Varshney

2. SUMMARY OF SECTIONS
Changes in
Existing
Section
Details Effective
from
Newly
Inserted
Section
Details Effective
from
194 TDS on Dividend 01/04/2020 194N TDS on Cash Withdrawal 01/07/2020
194A TDS on Interest other than
Interest on Securities
01/04/2020 194K TDS on Income from Mutual
Funds Units
01/04/2020
194J TDS on Fee for Technical &
Professional Services
01/04/2020 194LBA TDS on Income from Units of
Business Trust
01/04/2020
194LC TDS on Income by way of
interest from Indian
Company or Business Trust
01/04/2020 192(1C) Deferring TDS related to
income pertaining to Employee
Stock option Plan (ESOP) of
start- ups
01/04/2020
194LD TDS on Income by way of
Interest on Certain Bonds
& Govt Securities
01/04/2020 194O TDS on payment made to E-
Commerce Participants
01/10/2020

3. SECTION 192(1C)- NEW SUB-SECTION INSERTED
W.E.F 01/04/2020
Deferring TDS or tax payment in respect of income pertaining to Employee Stock Option
Plan (ESOP) of start- ups.

4. SEC 194 - TDS ON DIVIDEND
Existing Law Amendments
The company making arrangement for the declaration and payment of
dividends within India, shall, before making any payment in cash or before
issuing any cheque or warrant in respect of any dividend or before making
any distribution or payment to a shareholder of any dividend, deduct from
the amount of such dividend, income-tax at the rates in force :
Provided that no such deduction shall be made in the case of a shareholder,
being an individual, if—
(a) the dividend is paid by the company by an account payee cheque; and
(b) the amount of such dividend or, as the case may be, the aggregate of the
amounts of such dividend distributed or paid or likely to be distributed or
paid during the financial year by the company to the shareholder, does not
exceed two thousand five hundred rupees:
Provided also that no such deduction shall be made in respect of any
dividends referred to in section 115-O.
By any mode
At the rate of 10%
Any mode other than cash
5000 Rupees
Deleted

5. SEC 194, 194LBA, 194K
Section Explanation Amendments
115O DDT
any amount declared, distributed or paid by way
of dividends shall be charged to additional
income-tax at the rate of 15 per cent.
amend section 115-O to provide that dividend
declared, distributed or paid after 1st April, 2003,
but on or before 31st March, 2020 shall be covered
under the provision of this section.
10(34) Such dividend referred to in section 115-O is
exempt in the hands of shareholders
amend clause (34) of section 10 to provide that the
provision of this clause shall not apply to any
income, by way of dividend, received on or after
1st April, 2020.
115BBDA dividend income in excess of ten lakh rupee in
the hands of shareholder is taxable at ten per
cent
amend section 115BBDA which taxes dividend
income in excess of ten lakh rupee in the hands of
shareholder at ten per cent., to only dividend
declared, distributed or paid by a domestic
company on or before the 31st day of March, 2020.
10(35) Amount distributed by mutual fund to its unit
holder, Such income is exempt in the hands of
unit holders under clause (35) of section 10.
amend clause (35) of section 10 to provide that the
provision of this clause shall not apply to any
income, in respect of units, received on or after 1st
April, 2020.
10(23FD) any distributed income, referred to in section
115UA, received by a unit holder from the
business trust, is exempt in the hands of unit
holder.
amend clause (23FD) of section 10 to exclude
dividend income received by a unit holder from
business trust from the exemption so that the
dividend income is taxable in the hand of unit
holder of the business trust.
194 amend section 194 to include
dividend for tax deduction.
194LBA amend section 194LBA to
provide for tax deduction by
business trust on dividend
income paid to unit holder
194K insert a new section 194K to
provide that any person
responsible for paying to a
resident any income in
respect of units of a Mutual
Fund specified under clause
(23D) of section 10 deduct
income-tax there on at the
rate of ten per cent.

6. SECTION 194K – NEWLY INSERTED SECTION
TDS ON INCOME FROM MUTUAL FUND
W.E.F 01/10/2020

7. 194LBA: TDS ON INCOME FROM UNITS OF BUSINESS TRUST
Payment by Nature of Payment Payment to Rate of TDS
Business Trust Dividend Income Resident Unit Holders 10%
Non- Resident Unit Holders 5%

8. 194A- TDS ON INTEREST OTHER THAN
INTEREST ON SECURITIES
Payment Made by Nature of
Payment
Payment Made To Amount Paid Rate of
Tax
Cooperative Society
whose Turnover Exceeds
Rs 50 Crores during the
previous financial year
Interest Any Person
-Other than Senior
Citizen
- Senior Citizen
More than 40,000
More than 50,000
10%
Earlier, a co-operative society (other than a co-operative bank) is not required to deduct TDS
under Section 194A on interest paid to its members.

9. IN SECTION 194A , 194C , 194H , 194I , 194J
Keeping other things same as mentioned already in the section, Applicability for TDS deduction for
Individual and HUF has been changed as under –
– If an Individual or HUF is having business turnover more than Rs. 1,00,00,000/- in the financial year
immediately preceding the financial year in which such amount liable for tds is paid or credited &
– If an Individual or HUF is having professional receipts more than Rs. 50,00,000/- in the financial year
immediately preceding the financial year in which such amount liable for tds is paid or credited,
is required to deduct TDS.

10. 194J- TDS ON FEE FOR TECHNICAL SERVICES
W.E.F 01/04/2020
Particulars Rate of Tax
In case of fees for technical services other than
Professional Service
10% 2%
Professional royalty where such royalty is in the nature of
consideration for sale, distribution or exhibition
of cinematographic film
2%
Section 9(1)(vi) provides for certain income by way of royalty as deemed to accrue or arise in
India. However, the said Explanation specifically excludes consideration for the sale,
distribution or exhibition of cinematographic films. Due to such exclusion, such royalty income
is not taxable in India even if the DTAA gives India the right to tax such royalty. There is no
such exemption in the corresponding laws of partner countries leading to discrimination against
Indian residents. Thus, the Finance Bill 2020 proposes to amend the definition of royalty so as
not to exclude consideration for sale, distribution or exhibition of cinematographic films from its
meaning.

11. SECTION 194N W.E.F 01/09/2019
TDS ON CASH WITHDRAWL
To discourage cash transactions in the country and promote the digital economy

12. 194N W.E.F 01/07/2020

13. SECTION 194 O – NEWLY INSERTED SECTION
TDS ON PAYMENT TO E-COMMERCE PARTICIPANT
W.E.F 01/10/2020

14. 194LC: INCOME BY WAY OF INTEREST FROM
INDIAN COMPANY OR BUSINESS TRUST
Payment by Payment to Nature of
Payment
Rate of
TDS
Bond/Loan time limit
Indian Company
or Business Trust
-Non-Resident
- Foreign
Company
Interest on
Loan
5%
4%
- Under a loan agreement between 1stJuly 2012 to 1st
July 2020 2023.
- By issuing long term infrastructure bonds between
1st July 2012 to 1st October 2014.
- By issuing long term bond including long term
infrastructure bonds between 1st October 2014 to 1st
July 2020 2023.
- in respect of monies borrowed by it from a source outside
India by way of issue of any long-term bond or rupee
denominated bond on or after the 1st day of April, 2020
but before the 1st day of July, 2023,which is listed only on
a recognised stock exchange located in any International
Financial Services Centre

15. 194LD: INCOME BY WAY OF INTEREST ON CERTAIN BONDS
AND GOVERNMENT SECURITIES
Payment by Payment to Nature of
Payment
Rate of
TDS
Loan time limit
Any Person -Foreign
Institutional
Investor
-Qualified
Foreign
Investor
Interest 5% -Interest payable
a) on or after 1st June 2013 to 1st July
2020 2023 in respect of investment made in
- a rupee denominated bond of an Indian
Company
Or
- a Government Security.
b) on or after the 1st day of April, 2020 but
before the 1st day of July, 2023 in respect of
the investment made by the payee in
municipal debt securities.

16. SURCHARGE ON TDS & TCS- IN CASES IN WHICH TAX HAS TO BE DEDUCTED
UNDER SECTIONS 192A, 194, 194C, 194DA, 194E, 194EE, 194F, 194G, 194H, 194-I, 194-IA, 194-
IB, 194-IC, 194J, 194LA, 194LB, 194LBA, 194LBB, 194LBC, 194LC, 194LD, 194K, 194M, 194N,
194-O, 196A, 196B, 196C , 196D AND TAX HAS TO BE COLLECTED UNDER SECTION 206C OF
THE INCOME-TAX ACT, THE DEDUCTIONS SHALL BE MADE AT THE RATES SPECIFIED IN THOSE
SECTIONS AND SHALL BE INCREASED BY A SURCHARGE:
APPLICABLE TO NON RESIDENTS ONLY

17. SUMMARY OF SECTIONS
Changes in
Existing
Section
Details Effective
from
Newly
Inserted
Section
Details Effective
from
194 TDS on Dividend 01/04/2020 194N TDS on Cash Withdrawal 01/07/2020
194A TDS on Interest other than
Interest on Securities
01/04/2020 194K TDS on Income from Mutual
Funds Units
01/04/2020
194J TDS on Fee for Technical &
Professional Services
01/04/2020 194LBA TDS on Income from Units of
Business Trust
01/04/2020
194LC TDS on Income by way of
interest from Indian
Company or Business Trust
01/04/2020 192(1C) Deferring TDS related to
income pertaining to Employee
Stock option Plan (ESOP) of
start- ups
01/04/2020
194LD TDS on Income by way of
Interest on Certain Bonds
& Govt Securities
01/04/2020 194O TDS on payment made to E-
Commerce Participants
01/10/2020

18. CONTACT AT:
CA SALONI VARSHNEY
+91-8882716882
CASALONIVARSHNEY@GMAIL.COM