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Changes in TDS provisions

What are the changes as regards TDS provisions?

There is a welcome reduction in respect of the rate of tax for tax deduction from 20/15 per cent to 10 per cent in respect of rent and hire charges, now applicable both for movables and immovables under Sec.194-I.

There will, however, be an increase in the rate of tax deduction on commission under Sec. 194H and on payments for technical and professional service under Sec. 194J from 5 to 10 per cent with effect from June 1, 2007. Exception is also made in respect of TDS under Sec.194H in respect of commission payable by Bharat Sanchar Nigam Limited and Mahanagar Telephone Limited to public call office (PCO) franchisees.

Individuals and Hindu Undivided Families, who are liable for statutory audit under Sec. 44AB, will be made liable for TDS under Sec. 194C.

They were hitherto liable for TDS only in respect of sub-contracts in the language of the section as presently worded. An exception, however, is made in respect of payments made to a contractor by an individual or a member of Hindu Undivided Family exclusively for his personal purposes.

The tax deduction limit for payment of interest by banks is raised from Rs. 5,000 to Rs. 10,000 under Sec. 194A.

There is a similar increase in the limit to the same extent for deduction of interest on 8 per cent tax savings bonds.

S. RAJARATNAM

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