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if additional cess are applicable

pooja (1) (139 Points)

13 October 2009

Is additional surcharge i.e Education Cess & Higher Education Cess applicable on payment of Interest other than securities (194 A) & on Commussion & Brokerage (194 H) , if the Tax is deducted @ source

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6 Replies

Juzer Sadikot (CA - innovative solutions for Imports and Exports) (1309 Points)
Replied 13 October 2009

Dear Pooja,

Cess shall not be applicable on deduction of tax under following Sections

193, 194, 194A, 194B, 194BB, 194C,194D, 194EE, 194F, 194G, 194H, 194-I, 194J and 194LA.

Thanks

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praveen (Chartered Accountant) (6971 Points)
Replied 13 October 2009

no cess shall be deducted......

neither education cess nor higher education cess

nor surcharge.

CA Dhiraj Ramchandani (CA, M. com) (10823 Points)
Replied 14 October 2009

JUZER and PRAVEEN... i doubt on ur answers...

Coz to my knowledge,, education cess is deductible... i mean, tds is deducted at 10.3% for 194A and 194H... and few other sections too r there, where cess is deducted...

Nywz, let other members too clearify this,...

Juzer Sadikot (CA - innovative solutions for Imports and Exports) (1309 Points)
Replied 14 October 2009

Dear Dhiraj,

for your info.

Read Section 2(11) of Finance Act No. 2 of 2009 along with section 2(5) and 2(6) of said Act.

For your reference;

Chapter II

Rates of Income-tax

Income-tax.

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 cases wherever prescribed, in the manner provided therein.

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

(11) The amount of income-tax as specified in sub-sections (1) to (10) and as increased by the applicable surcharge, for purposes of the Union, calculated in the manner provided therein, shall be further increased by an additional surcharge, for purposes of the Union, to be called the “Education Cess on income-tax”, calculated at the rate of two per cent of such income-tax and surcharge so as to fulfil the commitment of the Government to provide and finance universalised quality basic education :

Provided that nothing contained in this sub-section shall apply to cases in which tax is to be deducted or collected under the sections of the Income-tax Act mentioned in sub-sections (5), (6), (7) and (8), if the income subjected to deduction of tax at source or collection of tax at source is paid to a domestic company and any other person who is resident in India.

Do revert if you are not satisfied.

Juzer