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Tds

Abhay Sethia (stundent) (300 Points)

01 January 2016

The TDS rate is applicable to whom i.e. given for dedcuter or deductee . I mean if I am a firm and payment to individual then what is rate and similarly if I paid to company then what is rate in case of contract.

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8 Replies

Ankur Singhal (CA Practice) (4470 Points)
Replied 01 January 2016

Dear generally the rates are specified for deductor but under section 194C you have to see the deductee also for applying TDS ratei.e either 1% or 2%

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Tony John (Chartered Accountant) (6085 Points)
Replied 01 January 2016

Deductor shall deduct tax at source at rates specified in the relevant sections.

In the case of TDS on contract payments covered in Section 194C, tax should be deducted by deductor in the following manner:

If receipient of income is individual or HUF - deductor shall deduct at 1%
If receipient of income is other than individual or HUF - deductor shall deduct at 2%.

TDS shall apply only if single sum paid/credited exceeds Rs.30,000 or total payments/credits during the year exceed Rs.75,000

It should be noted that for Section 194C to apply, deductor should be a 'specified person' as per Section 194C.

Ruchi (CA) (1410 Points)
Replied 01 January 2016

I guess your query is related to section 194C . In this section , it doesnt matters whether you are a company, firm, huf or individual.... etc. ........ if you are liable to deduct tds then what you have to see is to whom you are paying. That is, if the deductee is individual/huf then 1% and in other cases 2%.

shridhar (assistance) (33 Points)
Replied 01 January 2016

Thank you sir for your suggestions but still I have confused in deducting TDS on insurance premium

Manoj BG (Tax Professional and in Service) (1795 Points)
Replied 01 January 2016

Hello Mr. Shridhar,

TDS not applies on payment of insurance premium.

Thanks n Regards,

Manoj B. Gavali

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Aman Bhatia (Nothing) (34 Points)
Replied 01 January 2016

Hello... TDS Is Not Applicable On Payment Of Insurance Premium Though It IS applicable On Payment of Commision To Insurance Agent but Not On Insurance Premium.

Tony John (Chartered Accountant) (6085 Points)
Replied 01 January 2016

It should be noted that only 'specified persons' are bound to deduct tax at source u/s 194C. This implies that an individual who was not liable to Sec 44AB audit in the year immediately preceeding the year in which contract payment is made/credited, shall not deduct tax at source even if the amount exceeds limits prescribed therein since such an individual is not a specified person u/s 194C.

Nitin Chordiya (CA final Student) (264 Points)
Replied 02 January 2016

Basic :Payments to contractor -Section 194C applies to a person who is responsible for “paying any sum to a contractor or sub-contractor”. Such contractor or sub-contractor should be a resident in terms of section 6 of the I.T . Act, 1961.

Time of Deduction : As per Section 194C the payer is enjoined to deduct tax at source at the time of credit of any sum to the account of contractor or at the time of payment either in cash or by cheque or draft which ever is earlier .

Even where the credit is made in any account called “Suspense Account” or in the books of account of the person liable to pay such income, such credit will be deemed to be in the account of payee (contractor or sub-contractor as the case may be) and deduction of tax will have to be made.

Nature of Payment To contractor :The deduction is to be done for payment for carrying out any work(including supply of labour) in pursuance of a contract between the contractor and a specified person .

Job work :Where any sum is paid or credited for carrying out any work pertaining to manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased by such customer , then the tax is to be deducted at source ;

On the invoice value excluding the value of material, if such value is mentioned separately in the invoice; or
On the whole of the invoice value, if the value of the material is not mentioned separately in the invoice.

TDS rate : The deduction is to be made at the following rates :(applicable from 01.10.2009 ) (also applicable in Financial year 2015-16)

1% where payment/credit is to an individual/HUF .(check Forth Digit of Pan of contractor "P" or "H")
2 % where recipient is any other person.
No cess and surcharge on Basic TDS rates given above on payment made to Residents .

TDS without PAN : If Pan has not been provided by the deductee, then TDS must be deducted @ 20% u/s 206AA. (read Section 206AA in detail)

Cut off amount :If the credit or the payment in pursuance of the contract does not exceed Rs.30,000/-, no deduction has to be made at source. However , if the aggregate of all amounts paid/credited or likely to be paid/credited exceeds Rs. 75,000/- then tax at source is to be deducted.

Due date of Deposit: Before 7th of Next month , However if deposit by Book Adjustment by Govt department then on same day.Tax deducted in the Month of March due date is April 30th.