DECODED: Why 25% TDS relief is a big win for many mutual funds investors, salaried people and others

Finance Minister Nirmala Sitharaman on Wednesday announced various tax sops to help India fight Covid-19 pandemic. One of the major announcements was 25 per cent reduction in TDS. According to tax and investment experts, this reduction will curtail tax in the dividends gained by the mutual funds investors while it will also help those salaried people who are working as consultants and get their monthly salary through cheques after 10 per cent TDS deduction.

Speaking on the benefit to the mutual funds investors after the TDS rate cut decision by the FM, SEBI registered tax and investment expert Manikaran Singhal said, "This 25 per cent TDS deduction is good news for those mutual funds investors who have investments in dividend plans. In dividend plans, there is 10 per cent TDS deduction, which is now 25 per cent lesser means 7.5 per cent on entire dividends gained till 31st March 2021." Singhal said that this reduction in TDS rate cut will help those bank depositors as well who have earned interest more than Rs 10,000 in the financial year. Now, their TDS applied will be 7.5 per cent instead of 10 per cent.

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Another SEBI registered tax and investment expert Jitendra Solanki said, "Those who work as consultants get their monthly salary or payments though cheques after 10 per cent TDS deduction. Now, their TDS deduction will be 25 per cent lesser."

Solanki added that TDS reduction will help the residential property buyers as well. "For resident Indians, there is 1 per cent TDS levied on property buying while for NRIS, this TDS on property buying is 10 per cent. Now the TDS applied on resident Indians and NRIs will also go down by 25 per cent," said Solanki.