02 January 2009
1.What is Tax Deduction at source? Under the system of Tax Deduction at source (TDS), the payer is required to deduct tax at the time the payment is received by or credited to the account of the payee. This is similar to the PAYE system whereby tax is deducted by employer at the time emoluments are made available to the employee. 2. Which types of payments would be subject to tax deduction at source? Following types of payments would be subject to tax deduction at source: (a)Interest; (b)Royalties; (c) Rent; (d)Any sum paid to architects, engineers, land surveyors, project managers in construction industry, property valuers and quantity surveyors as consideration for services rendered by them; (e)Payments to contractors and sub-contractors. 3. What is the rate of tax deduction at source? The rate of tax deduction at source for different types of payments is: Interest 15% Royalties 10% Rent 5% Payments to providers of services 3% Payments to contractors and sub-contractors 0.75% 4.Deduction of tax at source is an advance payment of taxes and would thus be offset against the income tax liability of the payee. Thanks.
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