Tds on contractors

1) Yes, tds can be deducted more than the statutory rates but the same shall be deposited.
2) You should deduct TDS on whole amount (75000 as well as that excess amount in that FY).
And, if tds was not deducted on first 75000 then the same is not allowable expenditure according to income tax act,

You should deduct tds 2% either deductee is company, firm, coop society, local authority or  1 % individual huf  on threshold limit of rs. 30000. If you have to pay agrregate amount 75000 or more to deductee in a year then you should have to deduct  tds on this 75000.

If in the same FY it exceeds Rs. 75,000/- then you are required to deduct tax on whole amount and not the amount exceeding Rs. 75,000/-. If you don't make TDS on Rs. 75,000/- then it will not be allowed. Limits given under the TDS provisions are to be seen/referred per financial year.

1) nothing wrong in deducting more tax but same should be deposited on time.

2) once limit 75000 crosses u got to deduct tax on full amount paid ..

1. Yes you can deduct TDS at a rate which is more than the prescribed rate but it should be deposited with the Government.

2. TDS is to be deducted if one time payment is more than30,000/- or payment is more than75,000/- in a year.

3. Once the limit of75,000/- is exceeded, TDS is to be deducted on total amount and not on an amount excess of75,000/-.

4. It is sufficient to deduct and deposit TDS on the total amount to the Government on or before the date of filing return. If it deposited before filing return then there is no disallowance of expenses.

Hope this clarifies all doubts.

Sir,

i)  If the amount paid/payable or credited/likely to be credited to the     contractor/sub-contractor does not exceed Rs.30,000/- in a single instance  (Applicable from 1.7.2010. previously it was Rs.20,000).

However, the total of amounts paid or credited during the financial year should not exceed Rs.75,000/-. If the said amount exceeds Rs.75,000/-, then, the liability for payment arises on the whole of amount paid or credited and not on the amount in excess of Rs.75,000/-.( The limit of Rs.75,000 is applicable from 1.7.2010. Previously it was Rs.50,000)

ii)  if tds was not deducted on first 75000,then it will not be a allowable expenditure according to the act.