Richa Patel (Article) (166 Points)
12 October 2009M very confused...Should basic exemption limit should be deducted while calculating tds?????I mean Rs. 5000 the basic limit of exemption be deducted from the amount on which tax is to be deducted??????
Eg.: On Rs. 30000 tds should be calculated after deductiong rs. 5000 or without deducting...
SOme books contradict on this point
Till I knw TDS should b deducted on Rs. 30000. Pls help....
CA Devanshi Gandhi (Ajani)
(FCA DISA Mcom CIFRS & LLB)
(9060 Points)
Replied 12 October 2009
on 30000
Sunil
(Trader)
(2611 Points)
Replied 13 October 2009
Please do not be confused between TDS and Income Tax. Rs.5000 is not a tax exemption. It is taxable at the hands of the receiver. In the TDS sections the limits specified are those within which a deductor is not obliged to deduct the tax. Once the limit is crossed, tax is deducted on the entire amount paid during the year. Take for example 194A. If the interest is upto 10000, no tax but if it crosses 10000 then on the entire amount the bank will deduct tax. In case you placed an FD with Bank on which the interest payable throughout the year is 9500. They would not have deducted the tax that they normally do at time of credit of interest in September and March. However, if interest was not likely to exceed Rs.10000, bank would have deducted nothing in September. Now you place another FD with the same Bank in December that would inrease your interest on all your FDs to over Rs.10000, during March when Bank credits interest to your account, it will deduct TDS on the entire amount, including on what it did not deduct in September.
If you get confused with books, always fall back to the act available with www.incometaxindia.gov.in
194B reads as:-
194B. 44The person responsible for paying to any person any income by way of winnings from any lottery or crossword puzzle 45[or card game and other game of any sort] in an amount exceeding 46[five thousand rupees] shall, at the time of payment thereof, deduct income-tax thereon at the rates in force :
47[***]]
48[Provided 49[***] that in a case where the winnings are wholly in kind or partly in cash and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of whole of the winnings, the person responsible for paying shall, before releasing the winnings, ensure that tax has been paid in respect of the winnings.]
The act is clear that if the winning is above Rs.5000 you have to deduct tax on the entire winning. If it is less than Rs.5000 you are not obliged to deduct tax. If you win a car by lottery or prize money, the organiser will release the car to you only after you provide the evidence of having paid the income tax at special rates without your basic exemption.From the above paragraph the important thing to read is paying any income and shall deduct tax thereon. The Rs.5000 is a condition that the income should be more than Rs. 5000 and nowhere is it written or implied that it is an exemption. If the income paid out is greater than Rs.5000, tax is to be deducted thereon means it should be deducted on the income itself. remember that this is a CONDITION and not an EXEMPTION. Big difference between the two.
BTW If someone gifts you a car then the value of the car is taxable in your hand at your normal rate of tax.
Batul
(Article assistant)
(207 Points)
Replied 27 October 2009
dear in your case 5000 is not to be considered as exemption limit wheras it is the threshhold limit that is if the payement made is above Rs 5000 all the payments made during the year will be subject to tax deduction
Nilesh
(Job - Asst. Manager Accounts & Tax)
(38 Points)
Replied 22 November 2009
Deduction of TDS on whole amount i.e.30000/- basic exemption will not apply. as other section i.e. in case of 194c Rs.20000/- but Tds should be on whole amount when exceed Rs.20000/- or aggregate Rs.50000/- or take 194A int. Rs.10000/- but exceed Rs.10000/- then TDS should be deducted on whole amount ignoring basic limit.
Sanjay Madankar
(Manager Accounts)
(23 Points)
Replied 26 February 2011
in current finacial year 2010-11party reached the limit of Rs.50000/- in feb-2011, please clarify whether the TDS should be deducted from april -10 what are the norms of interest.
Regards
Sanjay
Sanjay Madankar
(Manager Accounts)
(23 Points)
Replied 26 February 2011
in current finacial year 2010-11party reached the limit of Rs.20000/- for profession charges in feb-2011, please clarify anybody whether the TDS should be deducted from april -10 what are the norms of interest.
Regards
Sanjay
U S Sharma
(glidor@gmail.com)
(21063 Points)
Replied 26 February 2011
| Originally posted by : Sanjay Madankar | ||
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in current finacial year 2010-11party reached the limit of Rs.50000/- in feb-2011, please clarify whether the TDS should be deducted from april -10 what are the norms of interest. Regards Sanjay |
 |
gross interest would be subject to TFS if the interst income is above 5000/- ( in banking its 10000)
Sanjay Madankar
(Manager Accounts)
(23 Points)
Replied 26 February 2011
| Originally posted by : Sanjay Madankar | ||
|
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in current finacial year 2010-11party reached the limit of Rs.20000/- for profession charges in feb-2011, please clarify anybody whether the TDS should be deducted from april -10 what are the norms of interest. Regards Sanjay |
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