Surcharge on TDS
This query is : Resolved
24 August 2009
Dear Experts,
As per the subsections (5),(6) of clause 2 of Chapter II of the Finance Bill (No. 2), 2009 as mentioned below:
(5) In cases in which tax has to be deducted under sections 193, 194, 194A, 194B, 194BB, 194D and 195 of the Income-tax Act, at the rates in force, the deductions shall be made at the rates
specified in Part II of the First Schedule and shall be increased by a surcharge, for purposes of the Union, calculated in cases wherever prescribed, in the manner provided therein.
(6) In cases in which tax has to be deducted under sections 194C, 194E, 194EE, 194F, 194G, 194H, 194-I, 194J, 194LA, 196B, 196C and 196D of the Income-tax Act, the deductions shall be made at the rates specified in those sections and shall be increased by a surcharge, for purposes
of the Union, in the case of every company, other than a domestic company, calculated at the rate of two and one-half per cent of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees.
I have observed the following in regard to Sec 194A, 194C, 194H, 194I and 194J:
1. Surcharge has to be added to TDS in case of Section 194A.
2. Surcharge is to be paid @ 2.5% to foreign companies only when the payment exceeds Rs. 1 crore.
That means that the earlier threshold of Rs. 10 Lackhs on individual or HUF and Rs. 1 Cr on companies on which surcharge was applicable has been removed?
Also will Cess of 3% be applicable if there is no surcharge?
Please verify whether my understanding is right, and if not please correct me.
Waiting for early response from the experts.
Thanks in advance
Madhumita Binani
As per the subsections (5),(6) of clause 2 of Chapter II of the Finance Bill (No. 2), 2009 as mentioned below:
(5) In cases in which tax has to be deducted under sections 193, 194, 194A, 194B, 194BB, 194D and 195 of the Income-tax Act, at the rates in force, the deductions shall be made at the rates
specified in Part II of the First Schedule and shall be increased by a surcharge, for purposes of the Union, calculated in cases wherever prescribed, in the manner provided therein.
(6) In cases in which tax has to be deducted under sections 194C, 194E, 194EE, 194F, 194G, 194H, 194-I, 194J, 194LA, 196B, 196C and 196D of the Income-tax Act, the deductions shall be made at the rates specified in those sections and shall be increased by a surcharge, for purposes
of the Union, in the case of every company, other than a domestic company, calculated at the rate of two and one-half per cent of such tax, where the income or the aggregate of such incomes paid or likely to be paid and subject to the deduction exceeds one crore rupees.
I have observed the following in regard to Sec 194A, 194C, 194H, 194I and 194J:
1. Surcharge has to be added to TDS in case of Section 194A.
2. Surcharge is to be paid @ 2.5% to foreign companies only when the payment exceeds Rs. 1 crore.
That means that the earlier threshold of Rs. 10 Lackhs on individual or HUF and Rs. 1 Cr on companies on which surcharge was applicable has been removed?
Also will Cess of 3% be applicable if there is no surcharge?
Please verify whether my understanding is right, and if not please correct me.
Waiting for early response from the experts.
Thanks in advance
Madhumita Binani
25 August 2009
Done
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