TDS Rate querry

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.

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

Vikrant Sir, Rajivji,

Thanks a lot for your kind guide

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

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

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,—

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.