TDS Rate querry

TDS 2783 views 10 replies

Manoj Asher

Service

99 Points Joined November 2008

I am working with Pvt. Ltd. Company under the activity of Shares Sub Broker.

My company has taken Loan from Individual. And on the same We have Paid Interest Say Rs. 50,000/-

On Rs. 50,000 I have deducted Tds @ 10.3% . Is it the correct rate which i have deducted.

I am asking this for reconfirmation. As far as Income Tax Reconer what i have realised that if the company will be recipient of Interest amount then Tds will be deducted on companies Interest income @ 20%. and if company is deductor of Tds of Individual then company will deduct 10% + surcharge + Education cess

Please guide me for my knowledge Thanks

Manoj Asher

Replies (10)

CA Vikrant Arora

Practicing Chartered Accountant

67 Points Joined June 2007

As u haven't mentioned whole information , I have taken 2 assumption that question is for FY 2009-10 & recipient is a resident.

The Applicable section is 194A (Interest other than Securities)

Present applicable rate is 10% , No surchage, No cess as FA 2009 IInd removed the cess & SC from TDS (Except on salary) . There isn't any diff in rate of TDS for Indivudals or Companies.

So u should bededucting Tax @ 10% , at time of providing the interest or actual payment , whichever is earlier.

One more thing , Tax is to be deducted @ 20% if recipient do not provide the PAN . But it is applicable from 1-4-2010.

Rajeev

54 Points Joined June 2009

To add to Mr Vikrant's reply, NO SURCHARGE OR CESS is only applicable from 01-10-2009 onwards..

Manoj Asher

Service

99 Points Joined November 2008

Vikrant Sir, Rajivji,

Thanks a lot for your kind guide

Manoj Asher

Service

99 Points Joined November 2008

To,

Vikrantji, Sunil Gargji

The querry which i have raised is for F.Y. 2007-08 and F.Y. 2008-09. and the individual was resident indian.

So still i want to confirm that at that time under section 194 A rate of deduction is 10% only.

Thanks for your reply

Manoj Asher

Service

99 Points Joined November 2008

Originally posted by :Manoj Asher
"	I am working with Pvt. Ltd. Company under the activity of Shares Sub Broker. My company has taken Loan from Individual. And on the same We have Paid Interest Say Rs. 50,000/- for the financial year 2007-08 and F.Y. 2008-09 to Resident Indian. On Rs. 50,000 I have deducted Tds @ 10.3% . Is it the correct rate which i have deducted. I am asking this for reconfirmation. As far as Income Tax Reconer what i have realised that if the company will be recipient of Interest amount then Tds will be deducted on companies Interest income @ 20%. and if company is deductor of Tds of Individual then company will deduct 10% + surcharge + Education cess Please guide me for my knowledge Thanks Manoj Asher	"

Juzer Sadikot

CA - innovative solutions for Imports an

1309 Points Joined November 2008

Originally posted by :Manoj Asher
"	To, Vikrantji, Sunil Gargji The querry which i have raised is for F.Y. 2007-08 and F.Y. 2008-09. and the individual was resident indian. So still i want to confirm that at that time under section 194 A rate of deduction is 10% only. Thanks for your reply Manoj Asher	"

Dear Mr. Manoj;

The applicable rate of Tax Deduction at Source for payment of Interest for F.Y. 2007-08 and 2008-09 for an individual resident under section 194A is 11.33% (10% Tax + 1% Surcharge + 0.33% Cess) in case the amount of interest exceeds Rs. 5000.

Surcharge shall be applicable irrespective of any Income Limit. In other word, if the income of that individual is not more than 10 lacs for that perticular year, your company still requires to deduct Tax with Surcharge.

Wiered but True.

Thanks

Aditya Maheshwari

CA in Practice

35867 Points Joined June 2009

I think Jufer is wrong on the surcharge part i. e. surcharge will not be applicable if payment of interest is less than Rs. 10 lakhs paid to an individual. You can deduct at a higher rate as there is no harm in it.

Juzer Sadikot

CA - innovative solutions for Imports an

1309 Points Joined November 2008

Originally posted by :Aditya Maheshwari
"	I think Jufer is wrong on the surcharge part i. e. surcharge will not be applicable if payment of interest is less than Rs. 10 lakhs paid to an individual. You can deduct at a higher rate as there is no harm in it.	"

Dear Aditya Sir,

I would like to draw your attention to Chapter II, sub-section 5 of Section 2 of Finance Act 2007 and 2008

Chapter II

Section 2

(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 each case, in the manner provided therein.

You are also requested to read sub-section 6 of said section for more clarity.

Advice me if I am wrong

Thanks and Regards

Aditya Maheshwari

CA in Practice

35867 Points Joined June 2009

Sub section 6 states as under6) 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, calculated,—

(a) in the case of every individual, Hindu undivided family, association of persons and body of individuals, whether incorporated or not, at the rate of ten 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 ten lakh rupees;

(b) in the case of every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, at the rate of ten per cent of such tax;

(c) in the case of every firm and domestic company, at the rate of ten 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;

(d) in the case of every company, other than a domestic company, 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.

So sub section (6) states that if incomes paid or likely to be paid and subject to the deduction exceeds ten lakh rupees then it is to be increased by surcharge and not otherwise. I dont know how are u interpreting it.

So the appropriate rate is 10.3% for F. Y. 2007-08 & 2008 - 09. In case of companies it is 20% (excluding surcharge & EC) if the person receiving the same is a company

Juzer Sadikot

CA - innovative solutions for Imports an

1309 Points Joined November 2008

Originally posted by :Aditya Maheshwari
"	Sub section 6 states as under6) 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, calculated,— (a) in the case of every individual, Hindu undivided family, association of persons and body of individuals, whether incorporated or not, at the rate of ten 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 ten lakh rupees; (b) in the case of every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act, at the rate of ten per cent of such tax; (c) in the case of every firm and domestic company, at the rate of ten 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; (d) in the case of every company, other than a domestic company, 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. So sub section (6) states that if incomes paid or likely to be paid and subject to the deduction exceeds ten lakh rupees then it is to be increased by surcharge and not otherwise. I dont know how are u interpreting it. So the appropriate rate is 10.3% for F. Y. 2007-08 & 2008 - 09. In case of companies it is 20% (excluding surcharge & EC) if the person receiving the same is a company	"

Dear Aditya Sir,

Please note sub section 6 of section 2 of Finance Act doesnt include section 194A, and hence the appropriate rate is 11.33 for specified years by virtue of sub-section 5 of section 2 of the Act.

Thanks.