During 2007-08, the rates for TDS were changed for some sections, with effect from 1st June 2007. In this connection, i would like to understand the following:
Lets assume the rate for Sec.194J was 3% upto 31st May and has been changed to 5% from 1st June onwards.
I have a transaction with a party for 10000 in April 2007. I did not deduct any TDS since the amount was less than 20000. In January 2008, i have another transaction with the same party. This is for 100000. Now i have to deduct TDS on the full 110000 (including the earlier 10000). Now should i deduct TDS @ 5% on the entire 110000 or should i deduct 5% on 100000 and 3% on 10000. Can someone please clarify? (Please note that the rates given above are hypothetical rates and not the actual rates for Sec.194J. However, the rate change indeed did happen with effect from 1st June 2007).
CAclubindia
