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what is withholding tax? when we use withholding tax?

what are the procedure in steps for calculating tds plz
tell me about all........

Answers were Sorted based on User's Feedback



what is withholding tax? when we use withholding tax? what are the procedure in steps for calcula..

Answer / ramu naidu

Withholding tax means to calculate in tax on payments only.
In India withholding tax is taken for the TDS sections
194C,194J,194I and soon.

Check withholding tax countries

Define withholding tax type for invoice posting

Define withholding tax type for payment posting

Define withholding tax codes

Formulas for calculating withholding

Assign withholding tax type to company codes

Activate withholding tax

create GL account and Automatic postings

Assigning W/tax types to vendor master

Is This Answer Correct ?    116 Yes 30 No

what is withholding tax? when we use withholding tax? what are the procedure in steps for calcula..

Answer / amit singh

Withholding Tax are applicable when payment is made to
NRIs and Foreign Companies:

Withholding Tax Rates for payments made to Non-Residents
are determined by the Finance Act passed by the Parliament
for various years. The current rates are:

1. Interest - 20% of Gross Amount

2. Dividends - 10%

3. Royalties - 20%

4. Technical Services - 20%

5. Any other Services - Individuals - 30% of net income


Companies/Corporates - 40% of net income

The above rates are general and in respect of the countries
with which India does not have a Double Taxation Avoidance
Agreement (DTAA).

Double Taxation Relief:

India has entered into DTAA with 65 countries including
countries like U.S.A., U.K., Japan, France, Germany, etc.
These agreements provides for relief from the double
taxation in respect of incomes by providing exemption and
also by providing credits for taxes paid in one of the
countries. These treaties are based on the general
principles laid down in the model draft of the Organisation
for Economic Cooperation and Development (OECD) with
suitable modifications as agreed to by the other
contracting countries. In case of countries with which
India has double taxation avoidance agreements, the tax
rates are determined by such agreements.

Is This Answer Correct ?    54 Yes 18 No

what is withholding tax? when we use withholding tax? what are the procedure in steps for calcula..

Answer / jagannadharao

when a payer paying some amount (rent,salaries,interest,
professional charges etc) he withheld some amount and pays
the remaining amount. and payer remits the withheld amount
to the income tax authorities on behalf of the payee. this
facilitates the proper collection of the tax.
caluculation of the tds depends on the nature of payment.
rates are prescribed by the finance act.
for example if a payer pays more than Rs10000 rent he
should deduct 2.02% of the amount.
if it is professional fee it is 10.30%.
( these rates will from country to country)
Note: Rates applicable in india are found in IncomeTax
Ready Reckoner)

Is This Answer Correct ?    50 Yes 22 No

what is withholding tax? when we use withholding tax? what are the procedure in steps for calcula..

Answer / srinath shenoy

Withholding tax terminology is popularly used for the word TDS from the amount payable to non-resident companies. Like we deduct TDS in India for various kind of professions, salary, rent, commission, interest etc, we deduct withholding tax from the same kind of charges charged by non residents and pay the deducted withholding tax to the government.

The various rates of WHT for the different kind of charges are as below:

Dividends- 10%
Interest- 20%
Royalties- 20%
Technical Services- 20%
Any other Services :
for Individuals, 30% of net income
for Companies/Corporates - 40% of net income

These rates are applicable for those who are not under DTAA agreements.

India has different rates than above for the countries who are under DTAA agreements. These can be availed in Income tax india website or from any income tax ready reckoner books.

Procedure calculating the TDS :

a.while making the payment, deduct TDS as per the rates applicable.
b. book the same in your accounts and a liability will be created in your books of accounts.
c.Pay the deducted TDS to the government within 7th of every following month of which TDS is deducted.
d.Get the challan numbers, and file the quarterly eTDS returns within 20 days after completion of related quarter.

Is This Answer Correct ?    21 Yes 5 No

what is withholding tax? when we use withholding tax? what are the procedure in steps for calcula..

Answer / k.sharath chandu

with holding tax is nothing but in a company is paying salary to the
employee(payee) the payer will detecut some amount with
obligation or detuct some amount from payee and the company
will pay the same amount to the government as a tax amount
to the government.
It also means in simple to calculate in tax on payments only

there are two types of with holding tax are
1)extended withholding tax:
the tax deducted at the time of invoice and at the type of payment which ever is earlier
2)classic withholding tax:
the tax deducted at the time of payment.

Is This Answer Correct ?    5 Yes 0 No

what is withholding tax? when we use withholding tax? what are the procedure in steps for calcula..

Answer / felix ade

Every employee or worker is obligated to pay tax, and the
government has empowered every employer to deduct certain
percentage of its employee's salary on its behalf. Therefore
Withholding tax is the amount of money deducted from an
employee's salary to be remitted to the government account.

TDS (Tax Deduction Statement): TDS is the statement or the
analysis of the money or tax deducted from employees over a
period of time. It is a document prepared by the employer
for the government.

Surcharge: This is the fee that is payable to the government
by an employer for keeping the money/tax deducted from its
employees over a period of time.

Is This Answer Correct ?    3 Yes 1 No

what is withholding tax? when we use withholding tax? what are the procedure in steps for calcula..

Answer / subhash.b

With holding Tax is nothing but Tax Deducted at source.
Whenever Salary is paying, the company has to deduct TDS as
With holidng Tax and Pay to the Govt. The rates of TDS are
differed for Salary(as per slab-192), Contractors(1% for
HUF, 2% for others-194c), Winning from Lottery(>5000,30%-
194B).

Is This Answer Correct ?    10 Yes 11 No

what is withholding tax? when we use withholding tax? what are the procedure in steps for calcula..

Answer / cute

Witholding tax

it is nothing but in a company is paying salary to the
employee(payee) the payer will detecut some amount with
obligation or detuct some amount from payee and the company
will pay the same amount to the government as a tax amount
to the government.

there are two types of with holding taxes extended and
classic

extended.

its is old version in this they will detuct at the time of
payment level

classic.

its a new verson in this they will do in both booking level
and in payment level......

Is This Answer Correct ?    63 Yes 65 No

what is withholding tax? when we use withholding tax? what are the procedure in steps for calcula..

Answer / tara chand gupta

with holding tax is a type of tax whoes the deduction on
foreign country coloubrite with indian comapny this rate
will be 15% on payment amount.

Is This Answer Correct ?    27 Yes 38 No

what is withholding tax? when we use withholding tax? what are the procedure in steps for calcula..

Answer / an accountant

Withholding tax doesn't come under double taxation relief
at all.

Is This Answer Correct ?    19 Yes 35 No

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