Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: empanelment :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TAX RATES - GOODS TAXABLE @ 4% :: VAT RATES :: list of goods taxed at 4% :: cpt :: ARTICLES ON INPUT TAX CREDIT IN VAT :: VAT Audit :: form 3cd :: TDS :: ACCOUNTING STANDARDS :: articles on VAT and GST in India :: Central Excise rule to resale the machines to a new company :: due date for vat payment :: ACCOUNTING STANDARD
 
 
News Headlines »
 10 ways you get benefited from filing your tax return
 Returns under CGST Act,2017 with Rules
 Ten facts to know about filing income tax return this year
 The Ten Commandments of Tax Filing
 How to claim income tax refund
 How to time your buys to have best of two tax regimes
 Here's why you must always check Form 26AS before filing tax return
 Want to file your income tax return after June 30? Having Aadhaar card is a must
 Timeline for filing of tax returns extended by two months
 Top 5 common mistakes to avoid while filing your income tax returns
 GST rollout on July 1: Deadline for filing tax returns extended

Self-employed to bear the brunt of TDS whip
March, 05th 2007

Budget 2007-08 has dealt a body blow to a host of self-employed professionals like architects, engineers, accountants, advertising, etc. The rate of tax deduction at source (TDS) has been doubled from the earlier 5% to 10% for these professionals.

This means that a professional who gets Rs 2 lakh as his fees will now have to shell out Rs 20,000 with the increase in the rate of withholding tax. Most professionals undertake several business expenses for which they claim tax breaks and these are set off against the TDS that they pay.

A higher rate of TDS will mean that they will first pay higher tax and then claim tax refund at the end of the year. Notwithstanding the governments attempts to speed up the tax refund process, in several cases, it takes a long time for the refund to come. This could create cash flow and working capital problems for professionals, a large number of whom operate on low capital.

While this TDS rate hike will be a body blow for legitimate professionals, it will check the growing trend of regular employees on the rolls of an organisation turning themselves into consultants to avail of the lower TDS rate. A higher TDS rate on a lump-sum amount will make this option less attractive.

According to the amended Section 194J of the Income Tax Act, 1961, if the fee for professional or technical service contract undertaken by any of these professionals is more than Rs 20,000, the contract awardee will have to deduct tax at the rate of 10%. The provision covers lawyers, engineers, doctors, architects, interior decorators, accountants and those working in areas of advertising and broadcasting.

Interestingly, while the government has increased the TDS rate, it has not increased the threshold limit of Rs 20,000, which is the limit for deducting TDS for a professional. This will result in cash flow issues for technical and professionals service providers. In fact, to provide relief to small service providers, the exemption limit should have been increased, said KPMG director Vikas Vasal.

The demand to raise the threshold for TDS has come from all quarters. The last tinkering in the threshold was carried out in 1994. In last 13 years, the economy has witnessed huge growth, and values of contracts have grown accordingly. Instead of tinkering with the threshold limit, the government has chosen to raise the TDS rate. This comes even as it raised the limit in the case of interest income, an industry source said.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Our Team

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions