SOUVIK BORAL (Practice) (319 Points)
27 November 2010I need clarrification on the following issue:
Consider following contractor's payemnts:
1. Rs. 25,000 on 25.05.2010
2. Rs. 25,000 on 14.08.2010
3. Rs. 20,000 on 02.02.2011
4. Rs 15,000 on 25.03.2011
Please let me know when i need to deduct TDS and on which amount. Also let me know whether interest shall be charged as Assessee-in-default, if yes, on what amount?
Murtuza Roshan
(Practicing Chartered Accountant)
(437 Points)
Replied 27 November 2010
For all the bills u have to deduct TDS!!! as the total is above the limit prescribed(50,000)!!
if the first bill was less than 20 in any case den for first bill it wasn't needed!!
In ur case for all the bill u hav to deduct!!
U hav to file TDS on quarterly basis, interest is chargeable @ 1% per month for delay!!!
sankalp
(Tax Consultant ( Income Service Sale Tax ))
(107 Points)
Replied 27 November 2010
Souvik
If u have contract with u r party of Rs.85,000/- than u deduct tds on the same as per payment @ 2% if u not sure about the payment and u r not cross the Limit Rs.50,000/- than don't deduct the tds
Secondly suppose u make payment to party in November 2010 u hv to deposit tds with authority (bank) before 7th December 2010 if u delay than payment have to deposit along with interest p.a 18% and p.m 1.5% interest will be charges on Tds amount e.g. Rs.25, 000/- Less tds @ 2% 500 assume delay for one month Rs 500 @ 1.5% + Rs.7.5 = 507.50.
Parshu
(CA Final)
(84 Points)
Replied 27 November 2010
If any payments made to the contractors exceeds Rs.20000 singly or Rs.50000 aggregating during the year shall deduct tax at the rate of 1% for individual and 2% for other than individual.
In your case, since the payment made exceeds Rs.50000 during the year (assuming payment made to same contractor) TDS shall me made.Tax must be deducted on the date of entry in his account or the date of payment , whichever is earlier.Tax must be deposited to the credit of Central Government on or before 7th of succeeding month of deduction.
But to avoid Disallowance U/S 40a,tax can be deposited on or before 28th of feb for tax deducted from april to feb and on or before filing of return U/S139 for tax deducted on march.
TDS returns must be filed quarterly.
Somebody
(IT Consultant)
(126 Points)
Replied 27 November 2010
wef 1-7-2010, the threshold limit for TDS in case of Contractors is Rs.30,000/- for single payment and Rs.75,000 for aggregare payment in a year.
TDS was to be deducted at the time of making first payment. Further, As per my view, TDS was to be deducted on the aggregare amount of 2nd, 3rd and 4th payments at the time of making the 4th payment, when the payments exceed the applicable threshold limit. In case of default, interest should be calculated as per the dates of 1st and 4th payments on respective amounts.
CA PRAVEEN MIGLANI
(Deputy Manager)
(26 Points)
Replied 28 November 2010
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Originally posted by : Somebody |
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wef 1-7-2010, the threshold limit for TDS in case of Contractors is Rs.30,000/- for single payment and Rs.75,000 for aggregare payment in a year. TDS was to be deducted at the time of making first payment. Further, As per my view, TDS was to be deducted on the aggregare amount of 2nd, 3rd and 4th payments at the time of making the 4th payment, when the payments exceed the applicable threshold limit. In case of default, interest should be calculated as per the dates of 1st and 4th payments on respective amounts. |
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In my view u r absolutely right.:-)
SOUVIK BORAL
(Practice)
(319 Points)
Replied 29 November 2010
Thanks somebody and CA Praveen. But please let me know, whether interest shall be charged, if i deduct and make the payment of tds on 2nd, 3rd and 4th bill at the time of payment of 4th bill. If yes, at what percentage 1% or 1.5%?
CA PRAVEEN MIGLANI
(Deputy Manager)
(26 Points)
Replied 29 November 2010
In my views, no interest is payable on the same as the liability to deduct the TDS just raised at the time of 4th payment only, when the transactions crossed the mark of 75,000/-. So the deduction shall be treated to be on correct time and no interest shall be levied.
Thanks and regards
Somebody
(IT Consultant)
(126 Points)
Replied 30 November 2010
TDS was to be deducted from the payment at sl no. 1 also. Interest liability - @ 1% monthly from the date of payment to contractor to the actual date of paying tax.
S. Karthi
(Tax Practitioner)
(589 Points)
Replied 30 November 2010
Dear SOUVIK BORAL,
1. Rs. 25,000 on 25.05.2010
2. Rs. 25,000 on 14.08.2010
3. Rs. 20,000 on 02.02.2011
4. Rs 15,000 on 25.03.2011
As above given details is very clear to deduct TDS u/s 194C. but, you have to confirm the nature of contract like Contract/ Sub-Contract/ Advertising, Contractor/ Sub-Contractor in Transport Business. because, The Nil rate will be applicable if the transporter quotes his PAN. If PAN is not quoted the rate will be 20%. (Transporter means persons engaged in plying, hiring and leasing of Goods Carriages) and the limit is for individual transaction. However, if aggregate payment to a contractor during the year exceed Rs. 50,000 (Rs. 75,000 w.e.f 1tst July, 2010), then tax will be required to be deducted, even where individual transaction is less than the threshold of Rs. 20,000 (Rs. 30,000 w.e.f. 1st July, 2010).
so, what you said details belongs to Transport contractor. you no need to deduct for whole year, but you have to quote PAN no. of the transporter. in case of contractor you should deduct @ 2% / in case of sub contractor or advertisement you should deduct @ 1% on payment or credit which ever is earlier. Payment/deposit of TDS should be quarterly wise. so, in your case has clearly cited Rs. 85,000/- amount of transaction happened during the year. so, you crossed the limit of Rs. 75,000/- and Rs. 25,000/- of 1st payment is above Rs. 20,000/- so, you have to deduct TDS for all the payments.
one thing you have to know. which is, There is no TDS rates has been changed during the year. so, you don't look on that. but, you have to see the calculation of interest, ie. 1% to be calculate upto 30-06-10 and there after 1.50%. Interest should be calculate from the date of payment / credit whichever is earlier and the interest amount should be rounded of to nearest multiple of Rs. 100/- as per sec 201(a1).
So, I thought you may come to the better end.
Parshu
(CA Final)
(84 Points)
Replied 30 November 2010
SORRY DEAR FRIENDS: Correction in my previous message
From 1st july 2010 the said limit has been increased from Rs.20000 to Rs.30000 Singly and from Rs.50000 to Rs.75000 aggregately.
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