CA. Abhishek K. Pandey (Manager (Advance)) (901 Points)
25 July 2010These are some questions about TDS, which I would like to know from our knowledgeable CAClubIndians.
1. What is the treatment of TDS if the service on which TDS is liable, is taken jointly.
2. When threshold limit exceeds, TDS should be deducted on current and future payments or should be calculated from past payments as well.
3. What when bill is received late and TDS rates changed.
Regards,
Abhishek K. Pandey
IMAM
(ARTICLE)
(22 Points)
Replied 26 July 2010
Manoj BG
(Tax Professional and in Service)
(1795 Points)
Replied 27 July 2010
1. TDS SHOULD BE DEDUCTED ONLY ON THE CHARGES THAT U R LIABLE TO PAY. WHEN THERE IS SERVICE SHARING, THERE IS COST SHARING AS WELL. U R LIABLE TO DEDUCT ON THE AMOUNT OF COST THAT U R LIABLE TO PAY AND NOT THE TOTAL SERVICE CHARGE AMOUNT.
HOWEVER, IF BILL FOR SUCH SERVICE COMES IN YOUR NAME AND U R LIABLE TO PAY TO CREDITOR FOR SUCH SERVICE AS WHOLE AND THERE IS AN UNDERSTANDING WITH U'R SERVICE SHARING PARTNER THAT PORTION OF TOTAL SERVICE CHARGES WOULD BE REIMBURSED TO YOU, THEN TDS WOULD BE DEDUCTED ON THE WHOLE AMOUNT AND NOT ONLY ON THE AMOUNT OF YOUR SERVICE SHARE...
2. WHEN THE THRESHOLD LIMIT EXCEEDED, TDS WOULD ALSO NEED TO BE DEDUCTED FOR THE PAST PAYMENTS IN THAT YEAR AND THIS SHOULD BE DEDUCTED AS SOON AS THE PAYMENT WHICH EXCEEDS THE LIMIT MADE.
3. TDS SHOULD BE DEDUCTED AT THE TIME OF CREDIT OR PAYMENT WHICHEVER IS EARLIER. IN THE GIVEN CASE, CREDIT WOULD BE GIVEN TO THE PARTY ONLY AT THE TIME OF RECEIPT OF BILL. THEREFORE TDS WOULD BE DEDUCTED AT THE REVISED RATES.
REGARDS,
MANOJ
CA. Abhishek K. Pandey
(Manager (Advance))
(901 Points)
Replied 27 July 2010
Ok. Thanks Manoj.
But, one more thing, suppose a person is has to pay a rent of Rs. 20,000.00 per month for a building. But, he pays this amount in lumpsum in January 2010 for last 9 months (i.e. from April 2009 to December 2009). Now, in this case how TDS should be deducted> Should it be 15% till the Sep. 2009 and 10% on further payments or 10% on all. Since new rates are effective from 01/10/2009. Please try to include a section or a case law, circular, notification etc., if possible.
Thanks again.
Regards,
Abhsihek K. Pandey
Manoj BG
(Tax Professional and in Service)
(1795 Points)
Replied 27 July 2010
Hi Abhishek,
U may have to refer to the rent agreement for this. TDS should be deducted at the time of credit or payment whichever is first. The question is when u'r rent becomes payable whether on tthe monthly basis, bimonthly, half yearly, quarterly, or some other basis.
if it is payable the monthly basis, u should have to deduct the TDS on the monthly basis and in that case u'r TDS rate would be 15% for april 2009 to sept 2009 and 10% thereafter. Sometimes agreement specifies that Rent should become payable at the 10th day of each succedding month, if it is for the month of september 2009, credit given in the books to landlord on the last day of month and thus TDS would be deducted at 15% even if the payment due date is 10th of october. The question here arises when is u'r liability to pay rent arises, it is not arises on the 10th day- it's only a due date. If is the date of last day of the month (in case rent becomes payable on monthly basis)
U doesn't even have to refer to any case law. it is much more clear in the law itself.
Hope this solves u'r query.
Regards,
Manoj
CA. Abhishek K. Pandey
(Manager (Advance))
(901 Points)
Replied 27 July 2010
So, is it true for other expenses as weel? For example, I book an expense worth Rs. 25,000.00 for a contract whose bill is dated 25-09-09, in February. Then, TDS would be deducted on the old rates?
Manoj BG
(Tax Professional and in Service)
(1795 Points)
Replied 27 July 2010
YES, u r right.
Regards,
manoj
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