Is surcharge and education cess to be added to the TDS by the deductor while deducting tax at source?
J. S. Rachiah, Gulbarga
The Finance Act, 2009 spares the deductors of tax, except from salary, of this burden. In other words, except employers deducting tax from salary, others deducting tax at source are not required to add surcharge and education cess to the amount of TDS. This would be a great relief to them.
The reason why employers continue to be burdened with the duty of adding education cess is that the tax computation as far as salary is concerned is final at the employers level. In other words, there is nothing ad hoc about TDS from salary. Since surcharge on income-tax has been abolished, the employer in any case is not required to deal with this aspect.
Extra allowance for truckers
Why truckers have been allowed an extra Rs 15,000 cash payment without attracting disallowance under Section 40A (3)?
K. S. Rajput, Ratnagiri
Payments in excess of Rs 20,000 otherwise than through account-payee cheque or draft is completely disallowed. The Finance Act, 2009 has raised the bar slightly in favour of truckers in that they can make such payments up to Rs 35,000 without attracting disallowance. The reason seems to be rooted in the reality that truckers often traverse long distance and need to carry sufficient cash to meet expenses en route, including on diesel. Given their literacy levels and considering the fact that banking channels might not have penetrated the Indian hinterland, the exception seems to be all right.
Differential voting rights
Why has the SEBI suddenly abolished shares with differential voting rights?
Mehak Razdan, New Delhi
Presumably because the idea of differential voting rights was a non-starter with just one big company Tata Motors making use of the dispensation that has been in vogue for about nine years now. Indeed, equity shares with differential voting rights have not caught the imagination of either the corporates or investors any where in the world. Though it is true that retail investors do not attach much importance to voting and, the voting right itself begets them a sizeable value which they cannot afford to forsake.
Shares with just economic rights and sans voting rights would trade at a heavy discount when the company is a takeover target because takeover is all about cornering voting rights. I think what SEBI has done is right. It has seen the writing on the wall - the futility of persisting with a dispensation that has no takers.
Perhaps, the idea would have taken off had the law mandated payment of minimum dividend year after year on shares without voting rights and, say, twice the dividend vis--vis on shares carrying voting rights. Attractive dividend in lieu of voting rights could have acted as a gravitas even though admittedly it would not be enough to bring the two categories of shares on a par in the run-up to take over.