Compilation of recent changes in TDS provisions

Written by Amit Agarwal on Aug 21, 2010

1. Interest on RBI 8% Savings Bonds, 2003 though taxable was till now exempted from TDS since they are Govt. securities. Effective 1.7.2007, any interest over Rs 10,000 in a financial year from such bonds would be subject to   TDS @ 10%.

2. The threshold limit for deduction of TDS by banks and cooperative banks in respect of ‘interest other than interest on securities’ paid to the depositors has been raised from Rs.5000 to Rs.10000 w.e.f. 1.06.07. The amendment applies only where the payer is a banking company or a co-operative society engaged in carrying on the business of banking or a post office in respect of notified schemes. In other cases, the threshold limit shall be retained at Rs. 5,000. Similarly in such cases, the returns, Form 15G/15H shall be filed in accordance with the increased limit.

3. W.e.f. 1.06.07, the payment by individual/HUF having turnover exceeding the limit prescribed in Section 44AB in respect of payment to contractors shall be subject to TDS.

4. TDS shall be deducted at the following rates w.e.f. 1.04.07:

(a) Payment to Contractors @ 2.266% if surcharge is applicable, otherwise the rate will be 2.06%.

(b) Payment to Sub-Contractor @ 1.133% if surcharge is applicable, otherwise it will be 1.03%.

(c) Payment of Interest -In case of non-corporate payee @ 11.33% if surcharge is applicable and otherwise 10.30%. In case of corporate payee @ 22.66% if surcharge is applicable and otherwise 20.60%.

(d) Payment for Professional/Technical Services/Commission/ Brokerage – From 01.04.2007 to 31.05.2007 @ 5.665% if surcharge is applicable otherwise 5.15%. From 01.06.2007 onwards @ 11.33% if surcharge is applicable, otherwise 10.30%.

(e) Payment of Rent for Land and Building – If paid to an individual or HUF @ 16.995% if surcharge is applicable otherwise 15.45%. If paid to a person other than individual or HUF @ 22.66% if surcharge is applicable otherwise 20.60%.

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