07-27-2010, 08:22 PM
The monetary limit of exemption from deduction of tax from payments account of supply of goods has been raised to Rs. 25,000/-. Previously the laid limit was Rs. 10,000/- as notified vide SRO. 586(I)/91 of 30th June, 1991. In respect of payments made on account of services rendered or execution of a contract, the monetary limit of exemption shall be Rs, 10,000/-. Now withholding tax shall not be deducted from the aforesaid payments unless such payments exceed Rs. 25,000/- in the case of supply of goods and Rs. 10,000/- in the case of services rendered or execution of a contract, in a financial year. However, if such payments exceed the above monetary limits during a financial year, then tax shall be deducted from all payments exceeding the said limits. Tax shall also be deductible on all such payments made earlier from which no deduction of tax was made.
