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Tds to deduct or not ?

TRILOCHAN (SENIOR ACCOUNTANT) (698 Points)

28 July 2011

Dear All,

Please confirm me, If a partnership firm paying to a contractor on 15.04.2011 Rs.15,000/-, (and the contractor not provided the PAN No to the firm), Whether the firm will deduct 20% TDS on Rs.15000/- or wait till cross the limit U/s 194C Rs.75000/- to deduct TDS Rs.20%.

Regards :-

TRILOCHAN OJHA

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40 Replies

CA J.Alamelu lakshmi (Chartered Accountant) (857 Points)
Replied 28 July 2011

Wait till it crosses Rs.75,000

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TRILOCHAN (SENIOR ACCOUNTANT) (698 Points)
Replied 28 July 2011

Dear,
As per Lattest amendment on tds, TDS transaction below the specified limit all section except Sec-192B should be disclosed in TDS return with "Y" flag. When we enter the transaction in WEBTEL without deductee PAN No, The software autometically deduct 20% TDS. otherwise the softare doesn't accept the entry.

AND

Sec 206AA told that if the deductee doesn't provide the PAN No to the deductee, the TDS rate will be 20% instead of the respective rate as per secrtions. (SPECIFIC LIMIT NOT MENTIONED)

Regards

TRIOCHAN

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 28 July 2011

it will be 20% if crosses the specified limit

TRILOCHAN (SENIOR ACCOUNTANT) (698 Points)
Replied 28 July 2011

Dear Aditya Jee

Pls see Sec206AA and refer to WEBTEL TDS software F.Y. 2011 -2012 , TDS autometicallt deducted 20% before the specified limit if the deductee PAN No not available.

CA J.Alamelu lakshmi (Chartered Accountant) (857 Points)
Replied 28 July 2011

I dont think so. The need for PAN comes when there s a liability to deduct tax arises. In the present case, only when the amount crosses rs.75000 / rs.30000, tax liabilty arises and deduction has to be made @ 20%.

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CA J.Alamelu lakshmi (Chartered Accountant) (857 Points)
Replied 28 July 2011

Mr.Trilochan,

Go to this page

/articles/print_this_page.asp?article_id=6373

TRILOCHAN (SENIOR ACCOUNTANT) (698 Points)
Replied 28 July 2011

LATEST TDS RATE (FY 2010-11) IS AVAILABLE HERE
New provision is given below

206AA. Requirement to furnish Permanent Account Number.—(1) Notwithstanding anything contained in any other provisions of this Act, any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVIIB (hereafter referred to as deductee) shall furnish his Permanent Account Number to the person responsible for deducting such tax (hereafter referred to as deductor), failing which tax shall be deducted at the higher of the following rates, namely:—

(i) at the rate specified in the relevant provision of this Act; or

(ii) at the rate or rates in force; or

(iii) at the rate of twenty per cent.

TRILOCHAN (SENIOR ACCOUNTANT) (698 Points)
Replied 28 July 2011

Dear Mr J.

Your attachment not opening.

CA J.Alamelu lakshmi (Chartered Accountant) (857 Points)
Replied 28 July 2011

Applicability of this section in case of payments (other than salaries) to residents when payment does not exceed the threshold limit specified in respective sections

· In case of payments or credits of payments which are covered by Sec 193 – Sec 194 LA the threshold limit as notified under the respective sections should be taken into consideration.

· The sections mentions clearly that no tax is required to be deducted where the amount or income or as the case may be the aggregate amounts of such income are paid or likely to be paid during the financial year by the aforesaid person to the account of the payee does not exceed the threshold limit mentioned in the respective sections.

· Thus when tax is not required to be deducted under these sections, Sec 206 AA cannot be activated even if the recipient does not furnish his PAN.