18 February 2010

IndianCAs: TDS rates in case of Section 194-C and 194-I gets simplified


TDS rates in case of Section 194-C and 194-I gets simplified this year. With several deductors requesting the department to ease the rates in these cases, department has finally take a call to streamline these rates.


Contract Payments:

Earlier, contract payments were attracting 2% TDS rate. If such contract is an advertisement contract then it was charged at 1%. Also all sub contracts were charged at 1% TDS rate.

The amendment in Section 194-C, makes it to be applied differently. The new rates includes, 1% for contracts received from Individuals/ HUF and 2% in case of others. These rates are same for both contracts and sub-contracts. Also note, there is nothing separate for Advertisement contracts.

Note: For Transport Contracts, if the Deductee provides the PAN, then, rate of TDS will be ZERO from 01st October 2009 to 31st March 2010. If the PAN is not provided then, TDS has to be made at 1% for Individuals/ HUF and 2% for others.

New rates for Contract:

  1. One Percent (1%) where payment for a contract are to individuals/ HUF.
  2. Two Percent (2%) where payment for a contract are to any other entity.


Rent Payments:

Earlier, rent payments were deducted at 10% in case of Plant/Machinery/ Equipments for all parties. In case of Land/Building/ Furniture/ Fittings, it was deducted at 15% for Individuals and 20% for others. Now the new amendment reduces the TDS rates and also makes it same for all types of Parties.

The newly amended 194-I section states that, the renting of Plant/Machinery/ Equipments for all parties will entertain TDS at 2% and renting of Land/Building/ Furniture/ Fittings at 10% for all types of party.

The reduction of these rates is said to be due to, blockage of Working Capital funds in most of the cases because of higher TDS rates.

New rates for Rent:

  1. Two Percent (2%) where payment for a rent is for Plant/Machinery/ Equipments.
  2. Ten Percent (10%) where payment for a rent is for Land/Building/ Furniture/ Fittings.



Applicable from October 2009

The amendment of rates in section 194-C and 194-I will be with effect from October 01, 2009. Any payments made till then should be made at earlier rates and not at new rates.

| Ashwin Nagar | FCA and SAP-FICO\SEM-BCS |
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1 comment:

  1. Voice of the Customer, or VoC, program in place.


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