In the Financial Year 2009-10, Our company has deducted @1% Subcontractors TDS and deposited the same amount in govt. account, we have received a show cause notice from Income tax department with demanding @ 2.26%, Please guide us .
01 February 2011
From 01/10/2009, TDS rates for contractors & sub-contractors were made similar. The only differentiation that was made was on the basis of status of the payee.
In case of Individual or HUF deductee (contractor or sub-contractor) : TDS rate is 1 %
So, in case of any other deductee (contractor or sub-contractor) : TDS rate is 2 %
So, most likely this subcontractor is not falling under Individual or HUF category & the rate of 1 % charged by you is not correct w.e.f. 1/10/09.
CAclubindia
