Friends,
The thresholds limit of deduction of Income Tax from various payments has been changed w.e.f. 1st of July 2010. The point to be noted is that TDS rates are same but only threshold limit has been changed.
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)
(TDS rates with effect from 1st April 2010)
| Section | Nature of Payment | Threshold limit upto 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)
(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 |
