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Applicability of Surcharge or Education Cess - Income Tax - Ready Reckoner - Income TaxExtract SURCHARGE OR EDUCATION CESS ON RATES PRESCRIBED IN CASE OF RESIDENT PAYEE/ DEDUCTEE Payee/ Deductee (i.e. to whom payment is made Applicability of Surcharge and Education Cess Companies No surcharge or education cess shall be added. Any other assessee No surcharge or education cess shall be added to the prescribed rate of TDS. However, surcharge and education cess shall be added on the TDS on the salary. (surcharge @ 12% where taxable salary exceeds 1 crore) IN CASE OF NON-RESIDENT PAYEE/ DEDUCTEE Payee/ Deductee (i.e. to whom payment is made Applicability of Surcharge and Education Cess Foreign Companies The rates of TDS shall be increased by: surcharge of 2% (where the payment made or to be made to payee and which is subject to tax deduction during the Financial Year exceeds 1 crore but does not exceeds 10 crores); or surcharge of 5% (where the payment made or to be made to payee and which is subject to tax deduction during the Financial Year exceeds 10 crore); and Education cess of 3% in all cases. Any other assessee The rates of TDS shall be increased by: surcharge of 10% (where the payment made or to be made to payee and which is subject to tax deduction during the Financial Year exceeds 1 crore); and Education cess of 3% in all cases. CLARIFICATION REGARDING TDS ON GST COMPONENT COMPRISED OF PAYMENTS MADE TO RESIDENTS CBDT has clarified through Circular No. 23/2017 that if GST on services has been indicated separately in the invoice, then no tax would be deducted on GST component. GST includes CGST, SGST, IGST, UTGST. CLARIFICATION REGARDING TDS ON SERVICE TAX COMPONENT COMPRISED OF PAYMENTS MADE TO RESIDENTS It is clarified that wherever in terms of the agreement/ contract between the payer and the payee, the service tax component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at source under Chapter XVII-B of the Act on the amount paid/ payable without including such service tax component.
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