17 Replies
Aditya Maheshwari
(CA in Practice)
(35867 Points)
Replied 29 October 2010
Payment is being made to Mr. Ravi and what is important while determining the rates applicable to deduct TDS is the payee. So the receipient is an individual and hence TDS deductible @ 1% and not 2%.
No education cess and surcharge now leviable for TDS deduction on residents except TDS on salary.
Whizkid
(student)
(640 Points)
Replied 29 October 2010
| Originally posted by : Aditya Maheshwari | ||
 |
Payment is being made to Mr. Ravi and what is important while determining the rates applicable to deduct TDS is the payee. So the receipient is an individual and hence TDS deductible @ 1% and not 2%. No education cess and surcharge now leviable for TDS deduction on residents except TDS on salary. |
 |
Agreee wit it..
Devendra
(Chartered Accountant)
(4775 Points)
Replied 30 October 2010
THE STATUS OF THE DEDUCTEE SHOULD BE CHECKED WHILE DEDUCTING THE TAX. IN YOUR CASE MR. RAVI IS AN INDIVIDUAL, THEREFORE TDS IS TO BE DEDUCTED @ 1%. (NO EDUCATION CESS OR SURCHARGE IS LEVIED)
CA Bineet Jain
(AUDIT MANAGER)
(21 Points)
Replied 30 October 2010
flat 2% is applicable.
No education cess and surcharge now leviable for TDS except TDS on salary.
Max Payne
(employed)
(2574 Points)
Replied 30 October 2010
TDS = 25,00,000*1% = 25,000/-
No education cess.
Rate of TDS u/s 194C depends on payee and not payer.
By the way, i assume you are talking about a transaction taking place after 01.10.2009.
Mohammad Asif
(chartered accountant)
(191 Points)
Replied 30 October 2010
in case of individuals the tds rate is 1% without the levy of education cess and surcharge
Faiz Ahmed
( Article Trainee)
(1731 Points)
Replied 30 October 2010
My friend have still doubt about TDS, so please clarify his question below :
I thank you all for your replies...!! And still I have another question, i.e., Suppose if the contractor there is not Mr. Ravi and its M/s LMN (P) Ltd, then the amount of TDS is 2% right ? But in my practical experience I have seen parties deducting 2% plus EC & SHEC also.
Please explain me why it is done so when only 2% should be deducted ? LMN (P) Ltd is a Manpower Service Providing company which go contract from a Defense Organisation. And when the Defense paid the Invoice amount every month, it will deduct 2.3% and not 2% to the company (Contractor). Please let me know the reason for deducting EC & SHEC ???
Thanks & Regards..!!
Gokul Viswanath Shenoy
(Company Secretary & Finance Manager)
(430 Points)
Replied 30 October 2010
TDS @ 1% is applicable to Mr. Ravi..the contractor..he's an individual and not a company for the TDS to be deducted @ 2%..he's the deductee.
Ajay Mishra
(Company Secretary)
(74337 Points)
Replied 01 November 2010
Under the Indian Income Tax Act, the following provisions relate to the Tax Deduction at Source from payments to Contractors and Subcontractors under section 194C.
· Person responsible for paying any sum for carrying any work to any resident contractor should deduct tax at source.
· Tax should be deducted at source only if the contract is between the contractor and the following specified persons:
1. The Central Government or any State Government.
2. Any local authority.
3. Any corporation established by or under a Central, State or Provincial Act
4. A company
5. Any Co-operative Society.
6. Any authority, constituted in India by or under any law, engaged either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both.
7. Any Society registered under the Societies Registration Act, 1960 or any law corresponding to that Act in any part of India.
8. Any Trust.
9. Any University established by or under any Central, State or Provincial Act or any institution declared to be a University under the University Grants Commission Act.
10. Any firm.
11. Any individual or Hindu Undivided Family whose books are required to be audited under section 44AB during the immediately preceding financial year. [The turnover from business/profession exceeds the limits specified u/s 44AB during the immediately preceding financial year].
12. Association of persons or Body of Individuals, whether incorporated or not, whose books are required to be audited under section 44AB during the immediately preceding financial year.
|
Important Note: As per section 206AA, with effect from 1.4.2010, every person who receives income subject to TDS under chapter XVIIB (covers all TDS cases) shall furnish to the deductor, his PAN. If PAN is not so furnished, the rate of TDS will be at the rates specified in the Act or at the rates currently in force or at 20% whichever is higher. Please note that this applies to non residents also. |
Individual or HUF need not deduct tax if the contract is exclusively for personal purposes.
· Income Tax should be deducted at the time of payment or credit to the account of the contractor whichever is earlier.
· Income Tax is to be deducted at source @ 1% if the contractor/sub contractor payee is an individual or HUF. Payment of amounts to persons other than Individual/HUF would attract TDS rate of 2%.
· Provisions of Section 194C are applicable only where the contract is either a “contract for carrying out any work” or a “contract for supply of labour for works contract”. Hence, these provisions are not applicable for payments made under the contract of sale of goods.
For the purpose of this section, the following contracts are also included in the scope of “Work”:
1. Advertising.
2. Broadcasting and telecasting including production of programs for broadcasting and telecasting.
3. Carriage of goods and passengers by any mode of transport other than Railways.
4. Catering.
5. Manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer.
but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer.
anand
(BUSINESS)
(136 Points)
Replied 18 November 2010
as the deductee(recepient) is an individual the rate of TDS is 1%.no edu cess for payment ma after 1.10.09.
Rahul Agarwal
(Future CA)
(217 Points)
Replied 19 November 2010
Dear Faiz,
Its nothing,
It would be 2% and certainly not 2.3%.
Lack of Knowledge man!!! and nothing else
Kumar.S
(Director)
(21 Points)
Replied 19 May 2012
Dear Seniors
I am a Contractor doing manpower supply to lot of MNCs in Chennai. We are supplying manpower for Japanse Language Interpreter for an MNC. The company is deducting the TDS under sec 194J as 10% from our bill. Since it is
coming under contractor payment the company should deduct under sec 194C.
Please clarify which is correct and I request have any prof for the same.
Regards
Kumar.S
Director
Ranjeet
(manager)
(73 Points)
Replied 19 May 2012
2% if forth character of pan is "C" and "F" ie company or firm
otherwise 1%
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