Tax rate on services for tax year 2020
Tax rate on services [Section 153, Division Ill of Part III of the First Schedule]
Tax deductible under clause (b) of sub-section (1) of section 153, for rendering of services is minimum tax, however, prior to the Finance Act, 2019, such tax was not minimum tax for companies of sectors mentioned in clause (94) of Part IV of the Second Schedule.
The companies mentioned in clause (94) were required to pay tax @ 2% of the gross amount of turnover from all sources, and where such tax @ 2% of gross turnover was paid, such companies could obtain exemption certificate from the Commissioner under sub-section (4A) of section 153.
Vide Finance Act, 2019, clause (94) has been omitted and now tax is to be deducted from the companies of sectors mentioned in the omitted clause (94) at the rate of 3% of the gross amount payable. The facility of exemption certificate is withdrawn as sub-section (4A) has been omitted.