VAT

Statistics


• Rates for:

o VAT: 31 States including Union Territories

o Entry tax: 19 States

o Sales tax: 30 States including Union Territories

• Number of commodities identified: 12,500 plus

• Number of Notifications: 3000 plus

• Number of cases (Commodities): 1450 plus

• Time taken to view one commodity in more than 25 States: less than a minute


 As per provision for eliminating the multiplicity of taxes, all the State taxes on purchase or sale of goods (excluding Entry Tax in lieu of Octroi) are required to be subsumed in VAT or made VATable.

 A provision has been made for allowing 'Input Tax Credit (ITC)' which is the basic feature of VAT. However, since the VAT being implemented is intra-State VAT only and does not cover inter-State sale transactions, ITC is not to be available on inter-State purchases.

 Exports to be zero-rated, with credit given for all taxes on inputs/purchases related to such exports.

 There are provisions to make the system more business-friendly. For instance, provision for self assessment by the dealers; provision of a threshold limit for registration of dealers in terms of annual turnover of Rs. 5 lakhs; and provision for composition of tax liability up to annual turnover limit of Rs. 50 lakhs.

 Regarding the industrial incentives, the States have been allowed to continue with the existing incentives, without breaking the VAT chain. Further, no fresh sales tax/ VAT-based incentives are permitted.

VALUE ADDED TAX (VAT)



What is VAT?


VAT stands for Value Added Tax. Value Added Tax (VAT) is levied on the supply of goods and services by vendors or it is a tax businesses charge when they supply their goods and services. We have to pay VAT on most of the things that we buy.



VAT CONCEPTS


Zero-rated items Zero-rated items are goods or services which are taxed at a rate of 0%, e.g. milk, brown bread, maize, fruit, etc.

VAT-exempted items These items involve services that are not subject to VAT at either the standard rate or zero rate, e.g. childcare services, educational services, etc.

Standard rate In South Africa Standard-rated supplies are taxed at the rate of 14%.

VAT-able items These items are goods or services that are subject to VAT.

VAT Output VAT paid on items purchased and can be claimed back from SARS. It is VAT, which your company would charge on items, which it, sells. Thus a company could wish to sell an item and added to the amount a standard rate tax would be charged.

VAT Input VAT on Sales and income and must be paid over to SARS. It is VAT that you pay on all your business expenses and for which you have a tax invoice. It also relate to VAT that is paid on other goods and services bought or rented for the business.


VAT Control Is a summary of the VAT Input and Output and shows whether the business owes SARS money or whether SARS owes the business money.

VAT CALCULATIONS



How to add VAT (Value Added Tax) to a price (14%)


This is the calculation you need to use when you know a PRICE BEFORE TAX (THE NET PRICE) but want to find out the PRICE AFTER TAX (THE GROSS PRICE).

VAT rate of 14%.


Net price Multiplied by 1.14 = Gross price

Price before tax Multiplied by 1.14 = Price after tax

Calculations:




The VAT standard rate is rate of 14%



First, get the multiplier:

14 100% = 0.14

0.14 + 1 = 1.14



The multiplier is 1.14



So...

Net price Multiplied by 1.14 = Gross price

Price before tax (Net price) Multiplied by 1.14 = Price after tax (Gross price)

E.g.:

R100 Multiplied by 1.14 = R114

R100 + Tax = R114 inc Tax









How to deduct VAT from a price - (14%)



People can often add VAT to a figure, but when it comes to taking it off it is a problem.



So here it is...



Taking-off VAT (Tax) from a price



This is the calculation you need to use when you know a PRICE AFTER TAX (THE GROSS PRICE) but want to find out the PRICE BEFORE TAX (THE NET PRICE).



VAT rate of 14%.

Gross price (price after tax) Divided by 1.14 = Net price

Price after tax Divided by 1.14 = Price before tax (Net price)



Calculations:



The VAT standard rate is rate of 14%



First, get the divisor:

14 100% = 0.14

0.14 + 1 = 1.14



The divisor is 1.14



So the back calculation for 14% VAT is ...

Gross price Divided by 1.14 = Net price

Price after tax Divided by 1.14 = Price before tax

E.g.:

R114.00 Divided by 1.14 = R100

R114.00 inc Tax = R100 + Tax



THREE BOOKKEEPING ACCOUNTS



For the purposes of Value Added Tax (VAT) records, three bookkeeping accounts must be kept.



1. The VAT on inputs account.

2. The VAT on output (transactions) account.

3. VAT Control (Debit and Credit) account.



 The VAT on Inputs Account –This account will usually show a debit (the VAT SARS "owe" you money for the VAT you have paid and you are entitled to receive from them).

 The VAT on Output (Transactions) Account –This account will usually show a credit (the VAT SARS are "entitled" to receive the VAT from you that you have collected on their behalf. The money is not yours and it is only temporarily in your possession until the due date for the payment of VAT.

 The VAT Control (Debit and Credit) Account. This is the account to which the 2 first accounts are posted. The account balance may show a credit, when the periodic report to the VAT is for a payment to be made, or it may show a debit when the periodic report shows that that money is to be returned.

1. The wholesaler sell the product to the retailer at R100 + 14% VAT = R114.00


2. The wholesaler collect VAT of R14.00 from the retailer and pays it over to SARS, thus taking the VAT out of the business (VAT Output)

3. The retailer claims back the VAT (R14) from SARS, thus put it back into the business (VAT Input)

4. The retailer adds a mark-up of 100% to the product and sell it to the consumer for R200 + VAT of R28.00.

5. The retailer collects the VAT (R28) from the consumer and pays it over to SARS, thus taking the VAT out of the business (VAT Output).

6. The consumer cannot register for VAT and cannot claim back the VAT.

7. SARS collected VAT to the amount of R28 instead of only R14 due to value being added to the product in the form of a mark-up percentage.

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
NB.


Although learners are not required to draw up journals, in this example journal entries are provided for better understanding of the ledger account.



Example 2:



30.1.09 - The total purchases that you made amount to R 1,000 by cheque plus R 150 VAT on inputs.

30.1.09 - The total cash sales you made amount to R 4,000 plus R600 VAT on outputs.

15.2.09 - You paid the balance that was owing to SARS.

BUSINESS

Steps involved in starting business in India


Registration Requirements:

No: Procedure Time to complete: Cost to complete:

1 Obtain director identification number (DIN) online from the Ministry of Corporate Affairs portal (National) 1 day INR 100

2 Obtain digital signature certificate online from private agency authorized by the Ministry of Corporate Affairs (National) 3 days INR 1,500

3 Reserve the company name online with the Registrar of Companies (ROC) (National) 2 days INR 500

4 Stamp the company documents at the State Treasury (State) or authorized bank (Private) 1 day INR 1,300 (INR 200 for MOA + INR 1,000 for AOA for every INR 500,000 of share capital or part thereof + INR 100 for stamp paper for declaration Form 1)

5 Get the Certificate of Incorporation from the Registrar of Companies, Ministry of Corporate Affairs (National) 5 days INR 14,133 (see comments)

6 Make a seal (Private) 1 day INR 350 (cost depends on the number of seals required and the time period for delivery)

7* Obtain a Permanent Account Number (PAN) from an authorized franchise or agent appointed by the National Securities Depository Ltd. (NSDL) or the Unit Trust of India (UTI) Investors Services Ltd., as outsourced by the Income Tax Department (National) 7 days INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application form, if not downloaded)

8* Obtain a Tax Account Number (TAN) for income taxes deducted at source from the Assessing Office in the Mumbai Income Tax Department 7 days INR 57 (INR 50 application fee + 12.36% service tax)

9* Register with the Office of Inspector, Shops, and Establishment Act (State/Municipal) 2 days INR 6,500 (INR 2000 + 3 times registration fee for trade refuse charges)

10* Register for Value-Added Tax (VAT) at the Commercial Tax Office (State) 12 days INR 5,100 (registration fee INR 5000 + stamp duty INR 100)

11* Register for Profession Tax at the Profession Tax Office (State) 2 days No cost

12* Register with Employees’ Provident Fund Organization (National) 12 days No cost

13* Register for medical insurance at the regional office of the Employees’ State Insurance Corporation (National) 9 days No cost



Detailed Steps and Explanation of procedure to start Business in India

Procedure I

Obtain director identification number (DIN) online from the Ministry of Corporate Affairs portal (National)

Time to complete: 1 day

Cost to complete: INR 100

Procedure:The process to obtain the Director Identification Number (DIN) is as follows:

1. Obtain the provisional DIN by filing application Form DIN-1 online. This form is on the Ministry of Corporate Affairs 21st Century (MCA 21) portal. The provisional DIN is immediately issued.

The application form must then be printed and signed and sent for approval to the ministry by courier along with proof of identity and (address):

a. Identity proof (any of the following): Permanent Account Number card, driver’s license, passport, or voter card;

b. Residence proof (any of the following): driver’s license, passport, voter card, telephone bill, ration card, electricity bill, bank statement;

2. The concerned authority verifies all the documents and, upon approval, issues a permanent DIN. The process takes about 4 weeks.

Procedure II

Obtain digital signature certificate online from private agency authorized by the Ministry of Corporate Affairs (National)

Time to complete: 3 days

Cost to complete: INR 1,500

Procedure: To use the new electronic filing system under MCA 21, the applicant must obtain a Class-II Digital Signature Certificate. The digital signature certificate can be obtained from one of six private agencies authorized by MCA 21 such as Tata Consultancy Services. Company directors submit the prescribed application form along with proof of identity and address. Each agency has its own fee structure, ranging from INR 400 to INR 2650.


Procedure III

Reserve the company name online with the Registrar of Companies (ROC) (National)

Time to complete: 2 days

Cost to complete: INR 500

Procedure: Company name approval must be done electronically. Under e-filing for name approval, the applicant can check the availability of the desired company name on the MCA 21 web site.

The ROC in Mumbai has staff members working full time on name reservations (approximately 3 but more if the demand increases). A maximum of 6 suggested names may be submitted. They are then checked by ROC staff for any similarities with all other names in India.

The MCA receives approximately 50-60 applications a day. After being cleared by the junior officer, the name requests are sent to the senior officer for approval.

Once approved, the selected name appears on the website. Applicants need to keep consulting the website to confirm that one of their submitted names was approved.

In practice, it takes 2 days for obtaining a clearance of the name if the proposed name is available and conforms to the naming standards established by the Company Act (1 day for submission of the name and 1 day for it to appear on the MCA website).


Procedure IV

Stamp the company documents at the State Treasury (State) or authorized bank (Private)

Time to complete: 1 day

Cost to complete: INR 1,300 (INR 200 for MOA + INR 1,000 for AOA for every INR 500,000 of share capital or part thereof + INR 100 for stamp paper for declaration Form 1)

Procedure: The request for stamping the incorporation documents should be accompanied by unsigned copies of the Memorandum and Articles of Association, and the payment receipt.

The company must ensure that the copies submitted to the Superintendent of Stamps or to the authorized bank for stamping are unsigned and that no promoter or subscriber has written anything on it by hand. The Superintendent returns the copies, one of which is duly stamped, signed, and embossed, showing payment of the requisite stamp duty. The rate of stamp duty varies from state to state.

According to Article 10 and Article 39 of the Indian Stamp Act (1899), the stamp duty payable on the Memorandum and Articles of Association for company incorporation in Mumbai, Maharashtra, is as follows:

a. Articles of Association: INR 1000/- for every INR 500,000/- of share capital (or part thereof), subject to a maximum of INR 50,000,000;

b. Memorandum of Association: INR 200;

c. Form-1 (declaration of compliance): INR 100.

Once the memorandum and articles of association have been stamped, they must be signed and dated by the company promoters, including the company name and the description of its activities and purpose, father-"s name, address, occupation, and the number of shares subscribed. This information must be in the applicant’s handwriting and duly witnessed.


Procedure V.

Get the Certificate of Incorporation from the Registrar of Companies, Ministry of Corporate Affairs (National)

Time to complete: 5 days

Cost to complete: INR 14,133 (see comments)

Procedure: The following forms are required to be electronically filed on the website of the Ministry of Company Affairs:

e-form 1; e-form 18; and e-form 32.

Along with these documents, scanned copies of the consent of the initial directors, and also of the signed and stamped form of the Memorandum and Articles of Association, must be attached to Form 1.

The fees for registering a company can be paid online by credit card or in cash at certain authorized banks. One copy of the Memorandum of Association, Articles of Association, Form 1, Form 32, Form 18 and the original name approval letter, consent of directors and stamped power of attorney must be physically submitted to the Registrar of Companies. The certificate of incorporation is sent automatically to the registered office of the company by registered or rush mail.

The registration fees paid to the Registrar are scaled according to the company’s authorized capital (as stated in its memorandum):

a. INR 100,000 or less: INR 4,000. If the nominal share capital is over INR 100,000, additional fees based the amount of nominal capital apply to the base registration fee of INR 4,000:

b. For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 1,00,000, up to INR 500,000: INR 300;

c. For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 500,000, up to INR 5,000,000: INR 200;

d. For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 5,000,000, up to INR 1 10,000,000: INR 100;

e. For every INR 10,000 of nominal share capital or part of INR 10,000 after the first INR 10,000,000: INR 50.

The payment of fees can be made:

1. offline: one can upload all incorporation documents and generate the payment challan. Against this challan, the applicant must obtain a demand draft for filing fees amount in favour of -" the Pay and Accounts Office, Ministry of Corporate Affairs, New Delhi" and this demand draft is payable in Mumbai. The applicant must make the payment at specified branches of certain banks. It takes around one week for clearance of payment. Only after the clearance of payment does the ROC accept the documents for verification and approvals;

2. online: the applicant makes the payment by credit card and the system accepts the documents immediately. Please note that in Mumbai, the ROC requests for pre-scrutiny of documents for any corrections, before they are uploaded. Once the documents have been uploaded, they can then be approved without any further correction. The online filing mechanism requires only one copy of scanned documents to be filed (including stamped MOA, AOA, and POA).

Schedule of Registrar filing fees for the articles and for the other forms (l, 18, and 32):

a. INR 200 for a company with authorized share capital of more than INR 100,000 but less than INR 500,000;

b. INR 300 for a company with nominal share capital of INR 500,000 or more but less than INR 2,500,000;

c.INR 500 for a company with nominal share capital of INR 2,500,000 or more.

Procedure VI.

Make a seal (Private)

Time to complete: 1 day

Cost to complete: INR 350 (cost depends on the number of seals required and the time period for delivery)

Procedure: Although making a company seal is not a legal requirement for the company to be incorporated, companies require a seal to issue share certificates and other documents. The cost depends on the number of words to be engraved, the number of seals required, and the time period for delivery. The cost can range from INR 300 to INR 500.


Procedure VII.

Obtain a Permanent Account Number (PAN) from an authorized franchise or agent appointed by the National Securities Depository Ltd. (NSDL) or the Unit Trust of India (UTI) Investors Services Ltd., as outsourced by the Income Tax Department (National)

Time to complete: 7 days

Cost to complete: INR 67 (INR 60 application fee + 12.36% service tax + INR 5 for application form, if not downloaded)

Procedure: Under the Income Tax Act, 1961, each person must quote his or her Permanent Account Number (PAN) for tax payment purposes and the Tax Account Number (TAN) for depositing tax deducted at source. The Central Board of Direct Taxes (CBDT) has instructed banks not to accept any form for tax payment (challan) without the PAN or TAN, as applicable. The PAN is a 10-digit alphanumeric number issued on a laminated card by an assessing officer of the Income Tax Department.

In order to improve PAN-related services, the Income Tax department (effective July 2003) outsourced their operations pertaining to allotment of PAN and issuance of PAN cards to UTI Investor Services Ltd, which was authorized to set up and manage IT PAN Service Centers in all cities where there is an Income Tax office. The National Securities Depository Limited (NSDL) has also launched PAN operations effective June 2004, setting up TIN Facilitation Centers.

The PAN application is made through the above mentioned service centers using Form 49A, with a certified copy of the certificate of registration, issued by the Registrar of Companies, along with proof of company address and personal identity. A fee of INR 60 (plus applicable taxes) applies for processing the PAN application. IT PAN Service Centers or TIN Facilitation Centers will supply PAN application forms (Form 49A), assist the applicant in filling out the form, collect filled-out forms, and issue an acknowledgement slip. After obtaining PAN from the Income Tax department, UTIISL or NSDL as the case may be, will print the PAN card and deliver it to the applicant.

The application for PAN can also be made online but the documents still need to be physically dropped off for verification with the authorized agent. For more details see(www.incometaxindia.gov.in , www.utiisl.co.in , and www.tin.nsdl.co.in )


Procedure VIII.

Obtain a Tax Account Number (TAN) for income taxes deducted at source from the Assessing Office in the Mumbai Income Tax Department

Time to complete: 7 days

Cost to complete: INR 57 (INR 50 application fee + 12.36% service tax)

Comment: The Tax Account Number (TAN) is a 10-digit alphanumeric number required of anyone responsible for deducting or collecting tax. The provisions of Section 203A of the Income Tax Act require that all persons who deduct or collect tax at the source must apply for a TAN. The section also makes it mandatory for the TAN to be quoted in all tax-deducted-at-source (TDS) and tax-collected-at-source (TCS) returns, all TDS/TCS payment challans, and all TDS/TCS certificates issued.

Failure to apply for a TAN or to comply with any of the other provisions of the section is subject to a penalty of INR 10,000/- . The application for allotment of a TAN must be filed using Form 49B and submitted at any TIN Facilitation Center authorized to receive e-TDS returns.

Locations of TIN Facilitation Centres can be found at www.incometaxindia.gov.in and http://tin.nsdl.com The processing fee for both applications (a new TAN or a change request) is INR 50 (plus applicable taxes). After verification of application, the same is sent to the Income Tax Department and upon satisfaction the department issues the TAN to the applicant.

The national government levies the income tax. Since outsourcing, any authorized franchise or agent appointed by the National Securities Depository Services Limited (NSDL) can accept and process the TAN application. The application for a TAN can be made either online through the NSDL website (www.tin-nsdl.com) or offline.

Upon payment of the fee by credit card, the hard copy of the application must be physically filed with the NSDL.


Procedure IX.

Register with the Office of Inspector, Shops, and Establishment Act (State/Municipal)

Time to complete: 2 days

Cost to complete: INR 6,500 (INR 2000 + 3 times registration fee for trade refuse charges)

Procedure: A statement containing the employer-"s and manager-"s names and the establishment’s name (if any), postal address, and category must be sent to the local shop inspector with the applicable fees.

According to Section 7 of the Bombay Shops and Establishments Act,-(1948), the establishment must be registered as follows: – Under Section 7(4), the employer must register the establishment in the prescribed manner within 30 days of the opening of the business. – Under Section 7(1), the establishment must submit to the local shop inspector Form A and the prescribed fees for registering the establishment. – Under Section 7(2), after Form A and the prescribed fees are received and the correctness of the statement on the form is satisfactorily audited, the certificate for the registration of the establishment is issued on Form D, according to the provisions of Rule 6 of the Maharashtra Shops and Establishments Rules of 1961.

Since the amendments in the Maharashtra Shops and Establishment (Amendment) Rules, 2003 dated 15th December 2003, the Schedule for fees for registration and renewal of registration (as per Rule 5) is as follows:

a. 0 employees: INR 100;

b. 1 to 5 employees: NR 300;

c. 6 to 10 employees: INR 600;

d. 11 to 20 employees: INR 1000;

e. 21 to 50 employees: INR 2000;

f. 51 to 100 employees: INR 3500;

g. 101 or more employees: INR 4500.

Hence in the given case the registration fees would be INR 2000, as there are 50 employees In addition, an annual fee (three times the registration and renewal fees) is charged as trade refuse charges (TRC), under the Mumbai Municipal Corporation Act,-(1888).


Procedure X.

Register for Value-Added Tax (VAT) at the Commercial Tax Office (State)

Time to complete: 12 days

Cost to complete: INR 5,100 (registration fee INR 5000 + stamp duty INR 100)

Procedure: Beginning April 1, 2005, the sales tax was replaced by the VAT, which requires registration by filing Form 101.

The authorized representative signing the application must be available at the Sales-Tax Office on the day of application verification. The applicant goes to the Sales-Tax Office and up to the registration counter. The clerk at the counter verifies that the applicant has all the required documents and gives the applicant a token (waiting number). After a short wait, the applicant-"s number is called and the applicant approaches the desk of a sales-tax officer.

There, all the information on Form 101 is manually entered into the system by the officer. Within 10 minutes, the system generates a Tax Identification Number (TIN) Thereafter, the company is considered fully registered to pay taxes. However, the applicant must wait between 10 and 15 days to receive the VAT registration certificate by mail.

In addition to Form 101, other accompanying documentation includes:

1) Certified true copy of the memorandum and articles of association of the company;-

2) Proof of permanent residential address. At least 2 of the following documents must be submitted: copy of passport, copy of driver’s license, copy of election photo identity card, copy of property card or latest receipt of property tax from the Municipal Corporation, copy of latest paid electricity bill in the name of the applicant;-

3) Proof of place of business (for an owner, in the case of Doing Business): Proof of ownership of premises viz. copy of property card, ownership deed, agreement with the builder or any other relevant documents;-

4) One recent passport-sized photograph of the applicant;-

5) Copy of Income Tax Assessment Order with PAN or copy of PAN card;-

6) challan on Form No. 210 (original) showing payment of registration fee at INR 5000 (in case of voluntary RC) and INR 500 (in other cases).

The whole process will be put online by the spring of 2009. This means that rather than physically having to go to the office, companies will fill in all their details online for Form 101 and then go to the office only so that the Sales Tax Office can verify the above listed-documentation.


Procedure XI.

Register for Profession Tax at the Profession Tax Office (State)

Time to complete: 2 days

Cost to complete: No cost

Procedure: According to section 5 of the Profession Tax Act, every employer (not being an officer of the government) is liable to taxation and shall obtain a certificate of registration from the prescribed authority. The company is required to apply to the registering authority using Form 1.

The registration authority for the Mumbai area is located at Vikarikar Bhavan, Mazgaon in Mumbai.

Depending on the nature of the business, the application should be supported with such documents as proof of address, details of company registration number under the Indian Companies Act (1956), details of the head office (if the company is a branch of company registered outside the state), company deed, certificates under any other act, and so forth.


Procedure XII.

Register with Employees’ Provident Fund Organization (National)

Time to complete: 12 days

Cost to complete: No cost

Procedure: The Employees Provident Funds and Miscellaneous Provisions Act (1952) applies to an establishment, employing 20 or more persons and engaged in any of the 183 industries and classes of business establishments, throughout India excluding the State of Jammu and Kashmir.

The applicant fills in an application and is then allotted a social security number. The Provident Fund registration focuses on delinquent reporting, underreporting, or non-reporting of workforce size. Provident Fund registration is optional if the workforce size is not more than 20. The employer is required to provide necessary information to the concerned regional Provident Fund Organization (EPFO) in the prescribed manner for allotment of Establishment Code Number. No separate registration is required for the employees.

Nevertheless, all eligible employees are required to become members of the Fund and individual account number is allotted by the employer in the prescribed manner. As per an internal circular, the code number is to be allotted within 3 days of submission, if the application is complete in all respects. However, in many cases applicants have received the intimation letter with the code number in 12 to 15 days. An online application facility is not provided so far.


Procedure XIII.

Register for medical insurance at the regional office of the Employees’ State Insurance Corporation (National)

Time to complete: 9 days

Cost to complete: No cost

Procedure: Registration is the process by which every employer/factory and every paid employee is identified for insurance purposes and their individual records are set up for them.

As per the Employees’ State Insurance (General), Form 01 must be submitted by the employer for registration. It takes 3 days to a week for the Employer Code Number to be issued. The-" "intimation letter""- containing the Code Number is mailed to the employer and that takes an additional couple of days.

The Employee-"s individual insurance is a separate process that is initiated upon the employer-"s registration. The employer is responsible for submitting the required declaration form and employees are responsible for providing correct information to the employer. The employee temporary cards (ESI Cards) are issued on the spot by the local offices in many places.

The temporary cards are valid for 13 weeks from the date of the employees’ appointment. It takes about 4 to 5 weeks to get a permanent ESI card.

TDS RATES F.Y 2011-12 A.Y 2012-13

With effect from 1-4-2010, the deductee shall furnish his PAN (Permanent Account Number) to deductor, failing which tax at the below rates of TDS or at the rate of 20% whichever is higher shall be deducted at source. Where PAN provided to the deductor is invalid or does not belong to the deductee, it shall be deemed that deductee has not furnish his PAN to the deductor and higher rate of TDS as mentioned below shall be applicable.


No surcharge, education cess and secondary and higher education cess is leviable for the financial year 2010-11 onwards for TDS purposes in case of payment to resident. But in respect of TDS on salary, cess will be leviable.

TDS  RATE  CHART
ASSESSMENT  YEAR  2012-2013
FINANCIAL  YEAR  2011-2012
Nature of Payments Made to Resident		Threshold	ompany Firm Co-op Soc. Local Authority	Individual UF	If No PAN OR Invalid PAN
Sec.	Description	Amount	RATE	RATE	RATE
194A	Interest - Payable by Banks	10,000	10	10	20
	Interest - Payable by Others	5,000	10	10	20
194B	Winning from Lotteries / Crossword Puzzle	10,000	30	30	30
194C	Payment to Contractors - Single Transaction	30,000	2	1	20
	Payment to Contractors - Aggregate during FY	75,000	2	1	20
194D	Insurance Commission	20,000	10	10	20
194H	Commission / Brokerage	5,000	10	10	20
194 I	Rent	1,80,000	10	10	20
	Rent - Plant / Machinery	1,80,000	2	2	20
194J	Professional Fees	30,000	10	10	20