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.)

Section Nature of Payment Existing Proposed
194B Winning from Lottery or Cross word puzzle 5,000 10,000
194BB Winning from Horse Race 2,500 5,000
194C Payment to Contractors [per Transaction] 20,000 30,000
194C Payment to Contractors [Annual Limit] 50,000 75,000
194D Insurance Commission 5,000 20,000
194H Commission or Brokerage 2,500 5,000
194I Rent 1,20,000 1,80,000
194J Fees for Professional and Technical Services 20,000 30,000

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)

Section Natureof Payment Threshold
limitupto
30th June,
2010
(in Rs.)
Threshold
limit w.e.f.
1st July,
2010
(in Rs.)
Individual/
HUF/ BOI/
AOP
Firm Co-
operative
Society /
Local
Authority
Company
192 Salary As per slab As per slab Normal Rate
(incl. cess)
N.A. N.A. N.A.
193 Interest on Securities
(1) Interest on Debentures or Securities (Listed) 2500* 2500* 10.00 10.00 10.00 10.00
(2) Interest on 8% Savings (Taxable) Bonds, 2003 10000 10000 10.00 10.00 10.00 10.00
(3) Any Other Interest on Securities (Unlisted) 0 0 10.00 10.00 10.00 10.00
194 Dividend other than dividend covered by Section 115-O 2500* 2500* 10.00 10.00 10.00 10.00
194A Interest other than Interest on Securities (other than below) 5000 5000 10.00 10.00 10.00 10.00
Where the payer is
(1) Banking Company 10000 10000 10.00 10.00 10.00 10.00
(2) Co-operative Society engaged in banking business 10000 10000 10.00 10.00 10.00 10.00
(3) Post Office (deposit scheme framed by Central Government) 10000 10000 10.00 10.00 10.00 10.00
194B Winning from Lotteries 5000 10000 30.00 30.00 30.00 30.00
194BB Winnings from Horse Races 2500 5000 30.00 30.00 30.00 30.00
* in case of resident only
194C Payments to Contractors
(1) In case of Contract/ Sub-Contract/ Advertising 20000 (Note 1) 30000 1.00 2.00 2.00 2.00
(2) Contractor/ Sub-Contractor in Transport Business 20000 (Note 1) 30000 NIL( Note 2) NIL (Note 2) NIL(Note 2) NIL(Note 2)
194D Insurance Commission 5000 20000 10.00 10.00 10.00 10.00
194E Non-Resident sportsman/ sports association 0 0 10.00 10.00 10.00 NA
194EE Deposits under NSS to Resident/Non-Resident 2500 2500 20.00 20.00 20.00 NA
194F Repurchase of Units of Mutual Fund/UTI from Resident / Non-Resident 0 0 20.00 20.00 20.00 NA
194G Commission on Sale of lottery tickets to Resident / Non- Resident 1000 1000 10.00 10.00 10.00 10.00
194H Commission or Brokerage to Resident 2500 5000 10.00 10.00 10.00 10.00
194I Rent to Residents
(a) Rent for Machinery/ plant/equipment 120000 180000 2.00 2.00 2.00 2.00
(b) Rent for other than in (a) 120000 180000 10.00 10.00 10.00 10.00
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)
194J Fees for professional / technical services to residents 20000 30000 10.00 10.00 10.00 10.00
194LA Compensation to Resident on acquisition of immovable property 100000 100000 10.00 10.00 10.00 10.0
195 Payment of other sums to a non-resident 0 Rate specified under Part II of First Schedule of Finance Bill, 2010 subject to provisions of DTAA
196B Income from units (including long term Capital Gain on transfer of such units) to an offshore fund 0 0 10.00 10.00 10.00 10.00
196C Income from foreign currency bonds or GDR of Indian Company 0 0 10.00 10.00 10.00 10.00
196D Income of FII from securities not being dividend, long term and short term capital gain 0 0 20.00 20.00 20.00 20.00

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)

Section Nature of Payment Threshold
Limit
(in Rs.)
Individual/
HUF/ BOI/
AOP
Firm Co?
operative
Society /
Local
Authority
Company
206CA Alcoholic liquor for human consumption and Indian made foreign liquor 0 1.00 1.00 1.00 1.
206CB/ CC/
CD
Timber obtained by any mode and any other forest produce 0 2.50 2.50 2.50 2.50
206CE Scrap 0 1.00 1.00 1.00 1.00
206CF/ CG/
CH
Parking lot / toll plaza / mining and quarrying 0 2.00 2.00 2.00 2.00
206CI Tendu leaves 0 5.00 5.00 5.00 5.00

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