TDS Rate for financial Year 2010-11/ Assessment year 2011-12 and Amendment made by union budget 2010

Increase in thresholds limit of deduction of tax from various payments

This bill proposes to increase various thresholds limit for deduction of tax from various payments like Winning from Lottery or Crossword Puzzle, Winning from Horse Race, Payment to Contractors, Insurance Commission, Commission or brokerage, Rent, Fees for Professional and Technical Services. The proposed amendments w.e.f 1st July, 2009 made under the new provision are summarized as under:

(Amounts in Rs.)

SectionNature of PaymentExistingProposed
194BWinning from Lottery or Cross word puzzle5,00010,000
194BBWinning from Horse Race2,5005,000
194CPayment to Contractors [per Transaction]20,00030,000
194CPayment to Contractors [Annual Limit]50,00075,000
194DInsurance Commission5,00020,000
194HCommission or Brokerage2,5005,000
194IRent1,20,0001,80,000
194JFees for Professional and Technical Services20,00030,000

Consequences of failure to deduct tax, or after deducting failure to pay tax deducted/tax collected at source u/s. 201(1A)

Under the existing provision of section 201(1A) of the Act, where the person does not deduct the tax or after deducting fails to pay the tax, he is required to pay simple interest at the rate of 1% for every month or part of the month. Amendments are proposed to treat the cases of failure to make payment, after deducting the tax at source more severally then the cases of pure failure. The proposed amendment to this section w.e.f. 1st July, 2010 has increased the rate of interest in cases of failure of payment after deduction to 1 1/2% for every month or part of the month till the date on which such tax is actually paid. The rate of interest will remain same at one percent for the cases of actual default of deduction of tax itself.

Certificate for tax deducted or collected u/s. 203 and u/s. 206C

The tax department was proposing to grant the credit of tax at source under their Online Tax Accounting System (OLTAS), completely obviating the necessity to issue certificate of deduction of tax at source and furnishing the same with the tax returns. Accordingly, the Finance Act, 2005, section 203 and section 206C(5) were amended for abolishing the requirement for issuance of the TDS and TCS certificate.

Considering the practical difficulties being encountered, the earlier procedure of issuance of TDS/TCS certificate has been restored.

TDS RATE FOR THE ASSESSMENT YEAR 2011-2012 (in %)
(TDS rates with effect from 1st April 2010)

SectionNatureof PaymentThreshold
limitupto
30th June,
2010
(in Rs.)
Threshold
limit w.e.f.
1st July,
2010
(in Rs.)
Individual/
HUF/ BOI/
AOP
FirmCo-
operative
Society /
Local
Authority
Company
192SalaryAs per slabAs per slabNormal Rate
(incl. cess)
N.A.N.A.N.A.
193Interest on Securities
(1) Interest on Debentures or Securities (Listed)2500*2500*10.0010.0010.0010.00
(2) Interest on 8% Savings (Taxable) Bonds, 2003100001000010.0010.0010.0010.00
(3) Any Other Interest on Securities (Unlisted)0010.0010.0010.0010.00
194Dividend other than dividend covered by Section 115-O2500*2500*10.0010.0010.0010.00
194AInterest other than Interest on Securities (other than below)5000500010.0010.0010.0010.00
Where the payer is
(1) Banking Company100001000010.0010.0010.0010.00
(2) Co-operative Society engaged in banking business100001000010.0010.0010.0010.00
(3) Post Office (deposit scheme framed by Central Government)100001000010.0010.0010.0010.00
194BWinning from Lotteries50001000030.0030.0030.0030.00
194BBWinnings from Horse Races2500500030.0030.0030.0030.00
* in case of resident only
194CPayments to Contractors
(1) In case of Contract/ Sub-Contract/ Advertising20000 (Note 1)300001.002.002.002.00
(2) Contractor/ Sub-Contractor in Transport Business20000 (Note 1)30000NIL( Note 2)NIL (Note 2)NIL(Note 2)NIL(Note 2)
194DInsurance Commission50002000010.0010.0010.0010.00
194ENon-Resident sportsman/ sports association0010.0010.0010.00NA
194EEDeposits under NSS to Resident/Non-Resident2500250020.0020.0020.00NA
194FRepurchase of Units of Mutual Fund/UTI from Resident / Non-Resident0020.0020.0020.00NA
194GCommission on Sale of lottery tickets to Resident / Non- Resident1000100010.0010.0010.0010.00
194HCommission or Brokerage to Resident2500500010.0010.0010.0010.00
194IRent to Residents
(a) Rent for Machinery/ plant/equipment1200001800002.002.002.002.00
(b) Rent for other than in (a)12000018000010.0010.0010.0010.00
Note:-1. This 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).2. 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)
194JFees for professional / technical services to residents200003000010.0010.0010.0010.00
194LACompensation to Resident on acquisition of immovable property10000010000010.0010.0010.0010.0
195Payment of other sums to a non-resident0Rate specified under Part II of First Schedule of Finance Bill, 2010 subject to provisions of DTAA
196BIncome from units (including long term Capital Gain on transfer of such units) to an offshore fund0010.0010.0010.0010.00
196CIncome from foreign currency bonds or GDR of Indian Company0010.0010.0010.0010.00
196DIncome of FII from securities not being dividend, long term and short term capital gain0020.0020.0020.0020.00

Note:

In order to strengthen the PAN mechanism, it is proposed to make amendments in the Income Tax Act to provide that any person whose receipts are subject to deduction of tax at source i.e., the deductee, shall mandatorily furnish his PAN to the deductor failing which the deductor shall deduct tax at source at higher of the following rates:

(i)     the rate prescribed in the Act;

(ii)   at the rate in force i.e., the rate mentioned in the Finance Act; or

(iii) at the rate of 20 percent

The above provisions will also apply in cases where the taxpayer files a declaration in form 15G or 15H (u/s 197A) but does not provide his PAN. Further, no certificate under section 197 will be granted by the Assessing Officer unless the application contains the PAN of the applicant.

TCS RATE FOR THE ASSESSMENT YEAR 2011-2012 (in %)
(TCS rates with effect from 1st April 2010)

SectionNature of PaymentThreshold
Limit
(in Rs.)
Individual/
HUF/ BOI/
AOP
FirmCo?
operative
Society /
Local
Authority
Company
206CAAlcoholic liquor for human consumption and Indian made foreign liquor01.001.001.001.
206CB/ CC/
CD
Timber obtained by any mode and any other forest produce02.502.502.502.50
206CEScrap01.001.001.001.00
206CF/ CG/
CH
Parking lot / toll plaza / mining and quarrying02.002.002.002.00
206CITendu leaves05.005.005.005.00

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