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% |
(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 |
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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% |
(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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