Amendments. in Withholding Taxes in India ( )

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1 Amendments in Withholding Taxes in India (009-) TM

2 About Floraison floraison in French means 'flowering'. The name reflects our objective of Accelerating Growth. Floraison India Compliances Private Limited is a Bangalore-based business consulting organization. As a company which provides integrated consulting services, we partner our clients from the stage of inception to assist them in successfully commencing their operations and further hand-hold them to run their company efficiently. At Floraison, we strive to cultivate strong relationships with our clients by providing them with solutions, which cater to their precise requirements. Customizability is therefore the essence of all the services provided by us. We believe true success is not just fulfilling our clients' requirements, but exceeding their expectations. And, to be successful, we work as an cohesive team all the way, using the best of tools and methodologies. Floraison is a member of:» Confederation of India Industry» Bangalore Chamber of Industry and Commerce» Indo-German Chamber of Commerce For more information on the company, Please visit us at

3 Services Disclaimer This publication is a product of Floraison India Compliances Private Limited. The items contained herein are provided for general information purposes only. Floraison strives to maintain up-to-date information from its own and other reliable sources; however, no responsibility is accepted for any errors and/or omissions or results of any actions based upon this information, without consulting Floraison first. Though all efforts have been made to ensure the accuracy of the content, the same should not be construed as a statement of law or used for any legal purposes. The information is for reference purposes only and should not be dealt with as advice.

4 Withholding Tax in India An Introduction: An assessee pays tax in the assessment year on the Income earned in the previous year. Due to this rule the tax collection is delayed till the completion of the previous year. Sometimes people even conceal their income and the tax is not paid at all. In order to overcome these problems, the government introduced Tax Deduction at Source (TDS), wherein certain amount of tax is deducted from the amount receivable by the assessee. TDS is an indirect method of collection of income tax. Under this method, an individual making certain payments is required to deduct the prescribed amount of tax from such payments and credit the same to Central Government account. Objectives Tax Deduction At Source To have a regular inflow of cash To advance the collection of taxes To prevent evasion of taxes To widen the network for collection of tax To shift the responsibility of deducting and depositing tax to persons others than tax payers to whom the tax relates Page

5 Amendments in Withholding Taxes Tax Deduction at Source (TDS) and Tax Collected at Source (TCS) systems have undergone several changes with effect from October 009. These include the changes in Abolishment of Surcharge & Education Cess. Reduction in percentage of withholding tax rate on interest. Reduction in percentage of withholding tax on contractual payment. Reduction in percentage of withholding tax on payment of rent. The following tables elucidate upon the changes in the rates of the withholding taxes with effect from October 009: Page

6 TDS rates for Financial Year 009- Category Salary (Section 9)* To Residents and Non-Residents Dividend to a resident (Section 94) a. Deemed dividend under section () E b. Any other dividend Rent (Section 94I) [Threshold amount is Rs 0,000 in a financial year] Incase of rent for use of 'any land, building, furniture or fittings Resident individuals / HUF Companies, firms and artificial judicial person not falling in any other category Incase of rent for use of 'any machinery or plant or equipment Resident Individuals / HUF Companies, firms and artificial judicial person not falling in any other category April 09 to 30 Sept 09 Rate (%) As per slab + Education Cess Oct 09 to 3 March Rate (%) As per slab + Education Cess 0 Page 3

7 Category Category Professional Services/Technical Services (Section 94J) [Threshold amount is Rs 0,000 in a financial year] Resident Individuals / HUF Companies, firms and artificial judicial person not falling in any other category Surcharge Rate (%) (%) Effective Rate Rate (%) (%) Contractual payments (Section 94C) [TDS applicable where amount paid/ credited to a contractor exceeds Rs 0,000 in a single instance. Additionally, TDS also applicable if aggregate sums paid/ credited in a financial year to contractors exceed Rs 50,000, even if individual contracts does not exceed Rs 0,000] Resident Individuals / HUF Companies, firms and artificial judicial person not falling in any other category Payments pursuant to advertising contracts and Sub-contractual payments (Section 94C) [TDS applicable where amount paid/ credited to a contractor/sub-contractor exceeds Rs 0,000 in a single instance. Additionally, TDS also applicable if aggregate sums paid/ credited in a financial year to contractors/sub-contractors exceed Rs 50,000, even if individual contracts does not exceed Rs 0,000] Resident Individuals / HUF Companies, firms and artificial judicial person not falling in any other category Page 4

8 Category Category Payments to Contractors in transport business owing not more than two goods carriages (Section 94C) Surcharge Rate (%) (%) Effective Rate Rate (%) (%) PAN Quoted PAN not quoted - Individual / HUF PAN not quoted - others Payments to Sub-contractors in transport business owing not more than two goods carriages (Section 94C) PAN Quoted PAN not quoted - Individual / HUF PAN not quoted - others Commission / Brokerage (Section 94H) [Threshold amount is Rs,500 in a financial year] Individuals Companies, firms and artificial judicial persons not falling in any other category Nil Nil Page 5

9 Notes: Surcharge and Education cess is not applicable on the TDS except for the following:» Education % and higher education % is applicable to salary paid to Resident / Non-resident employees» Education % and higher education % is applicable on the payments made to Non-resident / foreign companies» is applicable on the payments made to foreign companies only if the aggregate of such payments exceeds Rs Crore Disclaimer:» The list of items covered under each section is only an illustrative list. In case of any ambiguity, please revert to Team Floraison» Special rates of TDS apply on payments to non-residents. Page 6

10 Credits: Ashwini Kini Our Other Publications: Karnataka Value Added Tax Brief Provisions of Payment of Bonus Act Relevance of Section 40a(i) & (ia) of the Income Tax Act Central Labour Laws every employer should know about_ Central Labour Laws every employer should know about_ Central Labour Laws every employer should know about_3 International Organization for Standardization (ISO) Certification Micro, Small and Medium Enterprises Development Act, an insight Introduction to Minimum Alternate Tax (MAT) Statutory Audit Services at PPK & Co Research and Analysis - The consultant's perspective Deductions Available Under IT Act Being an Outstanding Recruiter Challenges Faced By HR Penalties Under Companies Act Corporate Tax in India Service Tax Regulations Input Tax Credit Employee Separation Formalities And more... Floraison India Compliances Pvt. Ltd., #85/7, nd Floor, "Chandra Plaza", 5th Cross, 8th F Main Road, Jayanagar 3rd Block Bangalore , India Tel: / 58 / 59 Fax: inflo@floraison.in TM

THE BUDGET Dhiren Shah & Co. Chartered Accountants Ahmedabad

THE BUDGET Dhiren Shah & Co. Chartered Accountants Ahmedabad THE BUDGET 2019-20 Dhiren Shah & Co. Chartered Accountants Ahmedabad Address : 2nd & 3rd Floor, Swastik Avenue, Swastik society, Navrangpura, Ahmedabad- 380009. Contents Particulars Page No About Us 1