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Tds rate - interim period

Shivani (Learner) (1881 Points)

12 November 2016

Dear Friends

Consider the following hypothetical situation:

Finance Bill 2017 introduced in Parliament on say 28-Feb-17.

TDS rate on rent changed by government from 10% to 15% as per FInance Act.

Now till 31-Mar-17, everyone will deduct TDS at 10% as per Finance Act 2016.

Now the Finance Bill gets passed on 10-May-17.

My question is that from 01-Apr-17 till 10-May-17, will be deduct TDS at old rate of 10% or the new rate of 15%?

regards

shivani

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6 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (170066 Points)
Replied 12 November 2016

The finance bill generally clarifies date of implementation. In most of the cases it is implemented from April 1st, unless otherwise specified.

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JAGANATHAN R ACMA, SAP(Fi-Co) (Manager Accounts and Finance) (915 Points)
Replied 14 November 2016

You can get the clear idear at that time., april 17

Shivani (Learner) (1881 Points)
Replied 14 November 2016

Dear Sir

If section increasing tds rate is effective from 1-4-17, then what about the less TDS deducted by deductor from 1-4-17 till 10-5-17?

regards

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (170066 Points)
Replied 15 November 2016

General practise is to deduct TDS at new rate (if higher), as proposed in finace bill (if to be implemented from 1st April), from the biginning of the year itself; as otherwise also adjustment in subsequent period is allowed.

Thiyagarajan (Article Assistant) (64 Points)
Replied 15 November 2016

All you have to do is Deduct the TDS at the amended rate from April 2017 itself.

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Shivani (Learner) (1881 Points)
Replied 25 November 2016

Dear Thiyagarajan

How can you deduct at amended rate from April 17 itself when the bill hasnt been passed yet ?

Its not possible, Bill means nothing till it gets passed and becomes Act.

Dear Dhirajlal

If there is a single transaction how can you adjust later ?

What i read in the Singhania Book is that you should follow whats more beneficial to assessee if the bill is not passed which means keep deducting at old rate till the FInance Bill gets passed. Old rate is lower, proposed rate is higher, but if we deduct at low rate and the transaction is a solitary one then how will get back the amount we short-deducted?

regards

shivani