Tds under section 195

TDS 405 views 4 replies

Rakesh Gupta

Manager

134 Points Joined February 2016

In Recent Budget FM announced that in case of Withholding Tax under section 195, Tax deductions should be as per DTAA or Income Tax whichever is lower and further it was mentioned that Tax @ 10% (I.T. Tax Rate) wll be applicable on such DEductions in case Non Resident entity provides certain documents but no where it is mentioned what are the valid documents to deduct TDS @ 10% instead of 20% if Supplier is not having PAN, which in most of the Non Resident Entities where vendor is not having PAN isued by I.T. Department.

Please advise on what are the valid document for such rate of TDS.

As month end is approaching, we need to deduct tax accordingly and do not want to deduct wrong tax.

Replies (4)

harish sama

Article assistant

81 Points Joined October 2015

Section 206AA(1) (1):-

Notwithstanding anything contained in any other provisions of this Act, any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVIIB (hereafter referred to as deductee) shall furnish his Permanent Account Number to the person responsible for deducting such tax (hereafter referred to as deductor), failing which tax shall be deducted at the higher of the following rates, namely:—

(i) at the rate specified in the relevant provision of this Act; or

(ii) at the rate or rates in force; or

(iii) at the rate of twenty per cent

Rakesh Gupta

Manager

134 Points Joined February 2016

Harish,

If we deduct TDS under sec. 195 as per IT Rate or 20% as the case may be, then do we need to add surcharge/Cess on TDS ?

For EXample, Vendor is having PAN, then will it will 10% or 10%+CEss/Surcharge ?

Similarly Vendor is not having PAN, then will it be 20% ot 20.6% (incl. Cess)

harish sama

Article assistant

81 Points Joined October 2015

No, the 20% amount is to be deducted at Fixed rate, no need to add cess/surcharge on it.

Rakesh Gupta

Manager

134 Points Joined February 2016

Last year for first quarter we deducted tax @ 20% without CEss, then department raised a demand asking us to pay Cess also. Then for subsequent quarters, we deducted 20.6%.