TAX FORUM: QUESTIONS & ANSWERS
Surcharge and cesses: where applicable?
The requirement of payment of surcharge and cesses for tax deduction at source would need some clarification.
Surcharge has been removed from personal taxation but not cesses. For tax deduction at source from salaries, the existing provision will continue without any change.
For all other payments to residents requiring tax deduction at source, there is no need to deduct either surcharge or cesses. The Schedule for tax deduction at source refers to surcharge only for a company other than a domestic company at 2.5 per cent. The rates prescribed in the Schedule refer to the whole year and not with reference to October 1, 2009, so that on the date on which the Bill becomes law, surcharge is not leviable for payments made during the year. While reduction in the rate of tax deductible at source is effective from October 1, 2009, omission of surcharge and cesses is inferred from the Schedule, which applies for the entire income during the financial year 2009-10.
In this sense, it would appear that it would not be incorrect for the deductor to adjust any surcharge or cess already deducted during the year before amendment against future payments, because the assessee will be within the law, if the total amount of tax deducted without reckoning surcharge and cesses during the year is not less than the amount of tax deductible for the whole year.
S. RAJARATNAM
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