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kindly advise

Abansal ( Manager) (121 Points)

03 October 2009

hi all,

kindly advise me regarding the new TDS rate of contractor applicable wef from 1st october.

whether it is applicable for all the bill booked from 1st october, whether the bill is of august or april or it is applicable only for the bills of october onwards

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7 Replies

Ram Avtar Singh (Nagari Sultanpur U.P.Delhi) (14477 Points)
Replied 03 October 2009

TDS rate applicable either Credit or Payment which is Earlier

if you are credited in october for the month of april New rate will applicable.

which is >20000 per consignment of 50000 annual.

TDs rate 1% for Individual. HUF & tohers 2%

No surcharge and cess to be deduct on resident prson/company

if None domestic company the surcharge & cess to be added while TDs deduct

CA SUDHAKAR (CHARTERED ACCOUNTANT) (189 Points)
Replied 03 October 2009

With effect from 1.10.2009, following are the changes made in TDS on Contract Payments:

1. There is no difference of TDS rates between TDS to Sub-contractors and Contractors.

2. No Surcharge or Cess on TDS amount, rate of tax is only 1% or 2%.

3. There is no difference between Advertisement contract and other contracts.

4. Rate of TDS on contract is 1% in case of payment made to Individual/HUF and it is 2% in case of payment made others such as Firm/Companies etc

work is worship (Service) (2728 Points)
Replied 03 October 2009

what if the annual contract amount is INR 75000/- and a payment is made on 30th june 2009 for 37500/- after deducting tax at the old rate.. so when paying the balance amount on 31st Dec, would Tds be paid on 37500/- only or the difference of earlier period adjusted.

CA SUDHAKAR (CHARTERED ACCOUNTANT) (189 Points)
Replied 04 October 2009

TDS is to be deducted on the date of payment or date of credit whichever is earlier. As the first payment (assuming it is an advance, without crediting any bills) was made before 1.10.2009, TDS is to be deducted on Rs. 37500 at old rate. Second payment is being made after 30.09.2009, TDS is to be deducted at New rate.

Thus total TDS liabilit may be worked out as below

Nature of Payment : Contract

First payment :Rs. 37500 - @ 1.03% for sub contract payment (Rs.386)

@ 2.06% for contract payment. (Rs.773)

Second Pymt of Rs.37500 - @ 1% if payee is an individual or HUF(Rs.375 )

@ 2% if payee is a company or firm(Rs.750)

work is worship (Service) (2728 Points)
Replied 04 October 2009

Thanks Sudhakar.. so even if the bill is received for full amount after 30th sep, the TDS would be only based onpayment. and not calculated on bill amount and difference deducted.