TDS

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varun jain (Querist)

04 July 2009 Respected sir,

Please advise me on the following tds issues
a) Whether surcharge is applicable: if A ltd makes payment to Ankit( individual) of Interest Rs.6 Lakhs and Commission Rs.5 lakh. Now total payment is Rs.11lakh. Whether TDS rate should be inclusive of Surcharge or only cess. i.e. 11.33% or 10.30%

b) In case, assessee deducts TDS but rate is not proper.Assessee deducts TDS at the rate of 10.3% but rate should have been 11.33%.So,now what is implication undersection 40(a)(ia).Whether expenses should be proposiontely or other wise.

Ratan Sharma

Ratan Sharma (Expert)

04 July 2009 Hi,
a) If the payment made is more than Rs. 10 lacs then the surcharge is applicable. In your case as the total of interest and commission exceeds Rs. 10 lacs therefore surcharge is deductible.
b) As per sec. 40(a)(ia) the tax should be deducted as per chapter XVIIB otherwise the expense will be disallowed . As per Chapter XVIIB, tax should be deducted as per the rate in force. Therefore if the tax is deducted at lower rate then the full expenses will be disallowed. The deduction should have been made and it should have been made as per the rate prescribed under the act.

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