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Budget 2007: Change in T.D.S. Rates
[Submitted by CA. Ashish M. Patel,
ACA,
Ahmedabad]
April 11, 2007
The following amendments have been made by the Budget 2007/CBDT in
respect of deduction of tax at source and issue of TDS certificate.
1. The rate of deduction of tax at source w.e.f. 1st April, 2007 are as
under :
(i) Payment to Contractors
Tax : 2%
Surcharge : 10% of Tax
Education Cess : 3% of tax and surcharge.
Hence over all rate will be 2.266% if surcharge is applicable otherwise
the rate will be 2.06%.
(ii) Payment to Sub-Contractor
Tax : 1%
Surcharge : 10% of Tax
Education Cess : 3% of Tax & surcharge
Hence over all rate will be 1.133%, if surcharge is applicable and
otherwise it will be 1.03%.
(iii) Payment of interest
A. If paid to a person other than a company
Tax : 10%
Surcharge : 10% of tax
Education Cess : 3% of Tax & Surcharge
Overall TDS rate : 11.33% if surcharge is applicable and otherwise
10.30%.
B. If paid to a company
Tax : 20%
Surcharge : 10% of Tax
Education Cess : 3% of tax and surcharge
Overall TDS rule : 22.66% if surcharge is applicable and otherwise
20.60%.
(iv) Payment for Professional/Technical Services/Commission/
Brokerage
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From 01.04.2007 to 31.05.2007 |
From 01.06.2007 onwards |
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Tax Rate 5% |
Tax Rate 10% |
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Surcharge 10% |
Surcharge 10% Tax |
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Education Cess 3% of the Surcharge |
Education Cess : 3% of Tax & Surcharge |
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Overall TDS Rate 5.665% if surcharge is applicable otherwise 5.15% |
Overall TDS rate 11.33% if surcharge is applicable, otherwise 10.30%
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(v) Payment of Rent for Land and Building
A. If paid to an individual or HUF
Tax Rate : 15%
Surcharge : 10% of Tax
Education Cess : 3% of tax & surcharge
Overall TDS rate : 16.995% if surcharge is applicable otherwise 15.45%
B. If paid to a person other than individual or HUF
Tax Rate : 20%
Surcharge : 10% of Tax
Education Cess : 3% of Tax & Surcharge
Overall TDS Rate : 22.66% if surcharge is applicable otherwise 20.60%
(vi) Payment of Rent for Plant and Machinery
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From 01.04.2007 to 31.05.2007 |
From 01.06.2007 onwards |
Tax Rate: 15% if paid to individual or HUF
: 20% if paid to a person other than Individual and HUF |
Tax Rate : 10% for all |
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Surcharge :10% |
Surcharge 10% Tax |
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Education Cess : 3% of Tax and Surcharge |
Education Cess : 3% of Tax & Surcharge |
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Overall TDS Rate :16.995% or 22.66% if surcharge is applicable
otherwise 15.45% or is 20.60% |
Overall TDS rate 11.66% if surcharge is applicable, otherwise 10.30%
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(vii) Salaries
Tax to be computed at normal rate on the basis of following table.
Basic Exemption Rs.1,10,000/-
From 1,10,000/- to 1,50,000 @ 10%
1,50,000/- to 2,50,000 @ 20%
2,50,000/- onward @ 30%
Surcharge to be levied @ 10% in case taxable income exceeds
Rs.10,00,000/-. Education Cess to be added @ 3%.
However Basic Exemption for Woman Tax Payers shall be Rs.1,45,000/- and
for Senior Citizen Rs.1,95,000/-
2. Education Cess @ 3% is applicable with effect from 1.4.2007.
3. Surcharge for deducting tax at source shall be leviable in case
where payment is made to an individual or HUF, AOP or body of individual
when aggregate amount paid or likely to be paid and subject to tax
deduction exceeds Rs.10 lakhs, in case payment is made to a firm or a
domestic company when aggregate amount paid or likely to be paid exceeds
Rs.1 crore. In the case of payment to other than a domestic company the
surcharge shall be levied @ 2.5%. Applicability of surcharge, in case
payment exceeds the above prescribed limit is effective from 01.04.2007.
4. Change in rate of deduction of tax at source on payment of
commission, brokerage, professional/technical services, rent shall be
effective from 01.06.2007.
5 Applicability of increased limit of Rs.10,000/- for non deduction of
tax in respect of payment of interest by bank shall be effective from
01.06.2007.
6. Applicability of leviability to deduct tax at source on payment by
individual/HUF having turnover exceeding the limit prescribed in Section
44AB in respect of payment to contractors shall be effective from 1st
June, 2007.
7. TDS Certificate to be issued in revised form No. 16, 16A & 27
notified by the CBDT.
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