Changes in TDS Rules & Procedure

Applicable for payments made on or after 01-10-2009.

By the Finance Act 2009 TDS rates are revised for some types of Payments. The new rates are applicable on and after payments made from 01-10-2009. The revised rates are as under:

Section 194C Contract Payments:

                                                                           New Rates                Earlier Rates

Contracts with Individual/HUF                     1%                  2%

Contracts with Others                                        2%                  2%

Here contracts includes Sub Contracts & Advertisement Contracts.

  • If any transporter provides PAN , the TDS on Contract payment is NIL.
  • In case PAN is not furnished TDS is to be deducted at the above rates only.

Section 194I Rental Payments:

                                                                     New Rates                  Earlier Rates

Rent of Plant & Machinery                            2%                         10%

Rent of Land or Building or                           10%                      15%

Furniture & Fittings to Ind./HUF


Rent of Land or Building or                             10%                      20%

Furniture & Fittings to Others


Points to Remember:

  • No Surcharge & Cess is applicable for TDS. (Applicable From 01-04-2009)
  • Cess is applicable on Salary Payments as before.
  • Quarterly Returns is not required to be filed from 3rd Quarter of F.Y. 2009-10 but new scheme of periodicity not prescribed as yet.
  • New Rate of TDS @ 20% in case on non availability of PAN is applicable only from F.Y. 2010-11.

12 Responses to “Changes in TDS Rules & Procedure”

  1. Ravi kant Says:

    Whether a businessman(retailer) is required to deduct tds on interest on deposits from his relatives

    • Viviek Says:

      Under the Income Tax Act the persons who are liable to deduct TDS are mentioned. Those persons includes Company, Firm, AOP/BOI, AJP and an individual who is liable to get his accounts audited u/s 44AB of the Act in the previous year immediately preceding the previos year in which TDS provisions are applicable.
      In your case if the term businessman includes any of the persons then TDS is to be deducted on interest on deposits , no matter that the deposits are taken from relatives or outsiders.

  2. Kaushik Gurukul Education Foundation Says:

    Please let us know how much tax to be deducted at sources when we make payment to our Civil Contractor for construction of our building at Rs.25.46 lakhs. Hehas PAN card also. The format for certificate to be issued to him when TDS is deducted.

    • Viviek Says:

      If your contractor is doing work in an individual or HUF capacity then TDS(Income Tax) @ 1% is to be deducted. In any other case TDS @ 2% is to be deducted on amount paid.
      TDS certificate is to be issued on Form 16A.
      Hope this satisfies you.

  3. premasekhar Says:

    what % will deduct to Civil contractors without PAN card plz tell me the TDS percentages

  4. P Srinivasa Rao Says:

    Dear Sir,
    i own a company, which is registeed with govt and got GRN No. We are doing sub-contract works of Ltd company based in PUNE. They are deducting a TDS of 10% in what ever payments they are making to us. I have got a PAN No. could you please tell me wether they can deduct TDS from the payments making to us. There was no TDS deduction for their payments made by Indian Navy. please sugest me in this regard.

    Thanking you sir

    • Viviek Says:

      Dear Mr. Rao,
      Under the Income Tax Act TDS is applicable on different types of payment at different rates. You have not given which type of subcontract works you are giving to Ltd company. If you are providing professional & technical service to Indian Navy under subcontract then TDS will be deducted at the rate of 10%. While If you are providing work contract to Indian Navy under subcontract then TDS will be deducted at the rate of 1%. It doesn’t matter whether Indian Navy is deducting any TDS of the Ltd. Co.

  5. P Srinivasa Rao Says:

    Dear sir,
    Thank-you very much for your clarification to my previous mail. We are doing the repair works in the Electronic control panels which were under contract with LTd Co. (original contract signed between INDIAN NAVY and LTD Co.). They were deducting TDS in their payments made to us. ours is a firm based in vizag. we have got 12 members working in it. they are making payments to the firm not to any individual in the firm.

    • Viviek Says:

      Since you are doing work contract under the name of partnership firm your applicable rate of TDS is 2%

  6. sharwan Says:

    Dear mr. Rao
    Sir I am a western union money transfer work. Sir company ne mera tax 20% deduct kar liya ha aur bolta ha ki iska tds certificate nahi milega kya 20% deduct ka refundable nahi milta ha kya agar ha to ple reply n section kon sa ha. Ple reply sir.

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