TDS under Section 195 at 20%

I have deducted TDS by grossing up and deducted TDS as 20%.

 

My question is cess and education cess is applicable or not ?

Replies (1)

Yes, if TDS under Section 195 is deducted at the rate prescribed under the Income Tax Act / Finance Act, then applicable surcharge and Health & Education Cess also need to be added. Therefore, if the base rate is 20%, the effective rate will generally be 20.8% after adding 4% Health & Education Cess, assuming no surcharge is applicable. If surcharge is applicable, cess will be calculated on tax plus surcharge. However, if deduction is made at a beneficial DTAA rate, surcharge and cess are generally not added separately.

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