Deduction Rate of TDS

This query is : Resolved

Muralidharan (Querist)
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23 April 2010 Dear Members

IT dept has specified different rates for deduction of TDS for individuals and non-individuals. In this regard my query is as follows

A contractor by name Lakshmi Enterprises (proprietary concern) does a job for a company (ABC Pvt Ltd). Bill value is Rs.40,000/- and bill is raised by Lakshmi Enterprises on ABC Pvt Ltd.

ABC has to deduct TDS under Section 194C. ABC calls for the PAN of the contractor. The contractor submits a copy of PAN card. It is found that the PAN is in the name of individual and not in the name of Lakshmi Enterprises.

Please advise whether TDS has to be deducted at 2% which is applicable for companies are at 1% applicable for individuals.

with regards

Muralidharan

CA Kapil B Gupta

CA Kapil B Gupta (Expert)
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23 April 2010 Lakshmi Enterprises should give a letter to ACB Pvt. Ltd. mentioning that Lakshmi Enterprises is proprietary concern alongwith copy of PAN because proprietary concern is always runned by Individual not by partners or company.
In your case, 1% TDS will be applicable.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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23 April 2010 Dear Murli,

LAXMI ENTERPRISES IS PROPRIETORSHIP CONCERN AS MENTIONED BY YOU THEN HOW CAN YOU DEDUCT TDS @2% WHICH IS FOR COMPANIES.
PROPRIETORSHIP CONCERN AND INDIVIDUAL ARE SAME ENTITY HAVING SAME PAN CARD. THERE CAN NOT BE 2 DIFF PAN CARDS FOR INDIVIDUAL/ AND HIS PROP FIRM.
SO DEDUCT TDS @ 1%

Regards.