Frequently Asked Questions on Tax Deduction at Source (TDS)

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Downloadable version - Tax Deduction at Source (TDS)

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1. GENERAL QUESTIONS

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   1. What is Tax Deduction at Source?

   2. Which types of payments would be subject to Tax Deduction at Source?

   3. What is the rate of Tax Deduction at Source?

   4. Is there a minimum threshold for deducting tax at source?

   5. When will the tax be deducted at source?

   6. When and how will the tax deducted at source be remitted?

   7. Is Tax Deduction at Source a final payment of tax?

   8. How will the payee know about tax deducted at source from his income?

   9. Is the payer required to furnish a statement to the MRA?

   10. When is a payer not required to deduct tax at source?

   11. If there are a number of liabilities of the payee, which payment has to be deducted first of all?

   12. Is the payer required to pay the tax which he failed to deduct at source ? Can he recover this amount from the payee subsequently?

   13. Is there any penalty for late payment of tax deducted at source?

   14. Is there any interest on unpaid tax?

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2. INTEREST

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   1. What type of interest payments are subject to Tax Deduction at Source?

   2. Who should deduct tax at source?

   3. Whether any individual paying interest should deduct tax at source?

   4. Which payees are subject to Tax Deduction at Source?

   5. Is a company receiving interest subject to Tax Deduction at Source?

   6. Which other types of persons receiving interest are not subject to Tax Deduction at Source on interest?

   7. What is the rate of Tax Deduction at Source?

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3. PAYMENTS TO CONTRACTORS AND SUB-CONTRACTORS

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   1. Which contracts are subject to Tax Deduction at Source?

   2. Who should deduct tax at source?

   3. Which payees are subject to Tax Deduction at Source?

   4. What does a contractor mean?

   5. What does a sub-contractor mean?

   6. When will provisions of Tax Deduction at Source take effect?

   7. What is the rate of Tax Deduction at Source?

   8. Is there a minimum threshold for Tax Deduction at Source?

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4. ROYALTIES

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   1. Meaning of Royalty

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5. PAYMENTS FOR SPECIFIED SERVICES

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   1. Which services would be subject to Tax Deduction at Source?

   2. Who should deduct tax at source?

   3. Which payees are subject to Tax Deduction at Source?

   4. When will provisions of Tax Deduction at Source take effect?

   5. Is there a minimum threshold for Tax Deduction at Source?

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6. RENT

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   1. What is rent?

   2. Who should deduct tax at source?

   3. Which payees are subject to Tax Deduction at Source?

   4. When will provisions of Tax Deduction at Source take effect?

   5. What is the rate of Tax Deduction at Source?

   6. Is there a minimum threshold for Tax Deduction at Source on rent?

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7. PAYMENTS TO OWNER OF AN IMMOVEABLE PROPERTY OR AGENT

8. PAYMENTS ON CONTRACTS FOR PROCUREMENT OF GOODS & SERVICES

9. COMMISSION

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   1. What is commission?

   2. Who should deduct tax at source?

   3. When will provisions of Tax Deduction at Source take effect?

   4. What is the rate of Tax Deduction at Source?

   5. Is there a minimum threshold for Tax Deduction at Source?

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10. PAYMENTS TO CONSULTANTS

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    1. Meaning of consultant

    2. Services not covered

    3. Rate of tax

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1. GENERAL QUESTIONS

   1. What is Tax Deduction at Source?

      Under the system of Tax Deduction at Source (TDS), the payer is required to deduct tax at the time the payment is received by or credited to the account of the payee. This is similar to the PAYE system whereby tax is deducted by employer at the time emoluments are made available to the employee.

   2. Which types of payments would be subject to Tax Deduction at Source?

      Following types of payments would be subject to Tax Deduction at Source:

      1. Interest

      2. Royalties

      3. Rent

      4. Payments to contractors and sub-contractors

      5. Any sum paid to accountant / accounting firm , architects, attorney / solicitor, barrister, engineers, interior decorator / designer, land surveyors, legal consultant, medical service provider, project managers in construction industry, property valuers, quantity surveyors and tax adviser or his representative as consideration for services rendered by them;

      6. Payment made on contracts by Ministry, Government department, local authority, statutory body or the Rodrigues Regional Assembly;

      7. Payment made to owner of an immovable property or his agent pursuant to section 111B(g);

      8. Payment made to a non-resident for any services rendered in Mauritius pursuant to section 111B(h);

      9. Management fees payable to an individual by any person , other than an individual;

      10. Payments in money or money's worth or transfers made by a person in connection with activities performed in Mauritius by a non-resident entertainer or sportsperson;

      11. Commissions payable by any person, other than an individual;

      12. Payments to consultants by any person, other than an individual;

      13. Payments to a provider of security services, cleaning services, pest management services and other ancillary services by any person, other than an individual; and

      14. Payments by insurance companies to motor surveyors and any other person for repairs of motor vehicles of policy holders.

   3. What is the rate of Tax Deduction at Source?

      The rate of Tax Deduction at Source for different types of payments is:

      	Amount or sum made available to the payee by way of -	Rate of tax (%)
      1.	Interest payable by any person, other than by a bank or non bank deposit taking institution, under the Banking Act, to any person, other than a company resident in Mauritius	15
      2.	Royalties payable to (a) a resident (b) a non-resident	10 15
      3.	Rent payable to  (a) a resident  (b) a non-resident	7.5 10
      4.	Payment to contractors and sub-contractors	0.75
      5.	Payment to providers of services as specified in the Fifth Schedule to the Income Tax Act	5
      6.	Payment made by Ministry, Government department, local authority, statutory body or the Rodrigues Regional Assembly on contracts, other than payments to contractors and subcontractors and payments to providers of services specified in the Fifth Schedule
      	a. for the procurement of goods and services under a single contract, where the payment exceeds 300,000 rupees;	1
      	b. for the procurement of goods under a contract, where the payment exceeds 100,000 rupees; or	1
      	c. for the procurement of services under a contract, other than telephone, postal, air travel and hotel services, where the payment exceeds 30,000 rupees	3
      7.	Payment made to the owner of an immovable property or his agent pursuant to section 111B(g)	5
      8.	Payment made to a non-resident for any services rendered in Mauritius pursuant to section 111B(h)	10
      9.	Payment of management fees pursuant to section 111B(i) to – (a) a resident (b) a non-resident	5 10
      10.	Payments to a non-resident entertainer or sportsperson pursuant to section 111B(j)	10
      11.	Commission	3
      12.	Payment to consultants pursuant to section 111B(l)	3
      13.	Payment made to a provider of security services, cleaning services or pest management services and other ancillary services pursuant to section 111B(m)	3
      14.	Payment made by insurance companies to motor surveyors and any other person pursuant to section 111B(n)	3

   4. Is there a minimum threshold for deducting tax at source?

      No amount shall be deducted when the amount of tax to be deducted is less than Rs 500.

   5. When will the tax be deducted at source?

      The tax is required to be deducted at source by the payer when the amount is paid to, or credited to the account of the payee whichever is earlier.

   6. When and how will the tax deducted at source be remitted?

      The returns are made electronically not later than one month from the end of the month in which the income tax was deducted; or in the case where remittance and the return are made in a manner other than electronically, not later than 20 days from the end of the month in which the income tax was deducted. The remittance and the return shall in respect of the months of May and November, be 2 days excluding Saturdays and public holidays, before the end of June and December, respectively.

   7. Is Tax Deduction at Source a final payment of tax?

      Deduction of tax at source is an advance payment of taxes and would thus be offset against the income tax liability of the payee.

   8. How will the payee know about tax deducted at source from his income?

      The payer shall issue a statement of income tax deduction in respect of the preceding income year, to the payee by 15th August every year showing the total payment made to the payee and the tax deducted there from. This statement has been prescribed in Income Tax Regulations.

   9. Is the payer required to furnish a statement to the MRA?

      The payer is required to furnish an annual statement electronically in respect of the preceding income year, not later than 15 August in every year, giving particulars of the payee, the amount or sum made available and the income tax deducted there from. See Annexure 1

      Where no income tax has been deducted a statement giving particulars of the payee and the amount or sum made available, shall be submitted.

   10. When is a payer not required to deduct tax at source?

       If a payee proves to the satisfaction of the Director General that he is not chargeable to income tax for a particular year, the Director General, may direct the payer in writing that no tax shall be deducted from payments made to the payee for that year.

   11. If there are a number of liabilities of the payee, which payment has to be deducted first of all?

       The obligation of the payer to deduct tax at source prevails over any right or obligation to deduct any other amount from such payments. In other words, tax to be deducted at source ranks first among deductions from payments made to the payee.

   12. Is the payer required to pay the tax which he failed to deduct at source ? Can he recover this amount from the payee subsequently?

       Yes. If the payer fails to deduct tax at source in accordance with the provisions of the Income Tax Act, he shall be personally liable to pay the said tax to the MRA. However, he is still entitled to recover from the payee, the tax which he failed to deduct.

   13. Is there any penalty for late payment of tax deducted at source?

       Yes. If the payer fails to pay in time, the tax required to be deducted at source, he shall be personally liable to pay, in addition to tax, a penalty equal to 10% of the amount of tax remaining unpaid.

   14. Is there any interest on unpaid tax?

       Yes. If a person fails to pay any tax required to be deducted at source he shall be liable to pay interest at the rate of 1%( of tax remaining unpaid) per month or part of the month during which the tax remains unpaid

        

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2. INTEREST

   1. What type of interest payments are subject to Tax Deduction at Source?

      The interest payments subject to Tax Deduction at Source include the following:

      1. bank interest;

      2. interest on deposits issued by non banking institutions;

      3. interest on debentures or any other loan instrument;

      4. interest on treasury bills and other loan instruments issued by the Bank of Mauritius.

   2. Who should deduct tax at source?

      The following persons should deduct tax at source:

      1. Any bank including the Bank of Mauritius;

      2. Any non-bank deposit taking institution;

      3. Any person issuing debentures or any other loan instrument.

   3. Whether any individual paying interest should deduct tax at source?

      No. An individual paying interest is not required to deduct tax at source.

   4. Which payees are subject to Tax Deduction at Source?

      Payees subject to Tax Deduction at Source are:

      1. individuals including minors and joint account holders with other individuals;

      2. sociétés or successions.

   5. Is a company receiving interest subject to Tax Deduction at Source?

      No. A company receiving interest is not subject to Tax Deduction at Source.

   6. Which other types of persons receiving interest are not subject to Tax Deduction at Source on interest?

      The other types of persons receiving interest who are not subject to Tax Deduction at Source are:

      1. A non resident individual;

      2. A non-resident societe;

      3. A societe holding a Global Business licence;

      4. A societe exempt from the payment of Income Tax.

   7. What is the rate of Tax Deduction at Source?

      The rate of Tax Deduction at Source is 15%.

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3. PAYMENTS TO CONTRACTORS AND SUB-CONTRACTORS

   1. Which contracts are subject to Tax Deduction at Source?

      Contracts related to civil construction or repair of any building, road or other structure and supply of labour to conduct civil construction are subject to Tax deduction at Source.

   2. Who should deduct tax at source?

      All persons excluding individuals who are making payments to contractors/sub-contractors should deduct tax at source. 

   3. Which payees are subject to Tax Deduction at Source?

      Payees subject to Tax Deduction at Source are contractors and sub-contractors engaged in carrying out civil construction or repair of any building, road or other structure or execution of any works contract and include mechanical or electrical works and include any supply of labour for carrying out works in respect of civil construction.

   4. What does a contractor mean?

      A contractor means any person who enters into a contract for carrying out any work.

   5. What does a sub-contractor mean?

      A sub-contractor means any person who enters into a contract with a contractor for carrying out any work.

   6. What is the rate of Tax Deduction at Source?

      The rate of Tax Deduction at Source is 0.75%.

   7. Is there a minimum threshold for Tax Deduction at Source?

      Yes , Rs 500.

       

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4. ROYALTIES

   1. What does royalty mean?

      Royalty means payment for artistic or literary work.

   2. Who should deduct tax at source?

      Companies and Société other than individual and companies holding a Global Business Licence should deduct tax at source on royalty payments.

   3. Which payees are subject to Tax Deduction at Source?

      All persons receiving royalties are subject to Tax Deduction at Source.

   4. What is the rate of Tax Deduction at Source?

      The rate of Tax Deduction at Source is 10% for a resident and 15% for a non-resident respectively.

   5. Is there a minimum threshold for Tax Deduction at Source?

      Yes , Rs 500.

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5. PAYMENTS FOR SPECIFIED SERVICES

   1. Which services would be subject to Tax Deduction at Source?

      Services provided by accountants / accounting firms, architects, attorneys / solicitors, barristers,  engineers, interior decorator / designer, land surveyors, medical service providers, project managers in construction industry, property valuers, quantity surveyors and tax advisers or their representatives would be subject to Tax Deduction at Source.

   2. Who should deduct tax at source?

      All persons other than individual should deduct tax at source.

   3. Which payees are subject to Tax Deduction at Source?

      Payees subject to Tax Deduction at Source are accountants / accounting firms, architects, engineers, interior decorator / designer, land surveyors, medical service providers, attorneys / solicitors, project managers in construction industry, property valuers, barristers, legal consultant, quantity surveyors and tax adviser or his representative.

   4. What is the rate of Tax Deduction at Source?

      The rate of Tax Deduction at Source is 5%.

   5. Is there a minimum threshold for Tax Deduction at Source?

      Yes , Rs 500.

       

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6. RENT

   1. What is rent?

      Rent means any payment, by whatever named called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or building together with furniture, fittings and the land appurtenant thereto, whether or not such building is owned by the payee and also includes any premium or other consideration for a lease. 

   2. Who should deduct tax at source?

      All persons other than individual should deduct tax at source. 

   3. Which payees are subject to Tax Deduction at Source?

      All persons except a body of persons exempt from the payment of Income Tax would be subject to Tax Deduction at Source. 

   4. What is the rate of Tax Deduction at Source?

      The rate of Tax Deduction at Source on rent is as follows:

      1. 7.5% for resident; and

      2. 10% for non-resident

   5. Is there a minimum threshold for Tax Deduction at Source on rent?

      Yes , Rs 500.

       

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7. PAYMENTS TO OWNER OF AN IMMOVEABLE PROPERTY OR AGENT

   1. Which payments are subject to Tax Deduction at Source?

      Rental or other consideration for board and lodging made to the owner of an immovable property or his agent, other than a hotel.

   2. Who should deduct tax at source?

      1. Tour operators or travel agents, other than an individual

      2. An IRS Company or RES Company or a provider of property management services

      3. Any other agent, other than individual, carrying on the business of providing services in respect of letting of properties.

   3. Which payees are subject to Tax Deduction at Source?

      All persons except a body of persons exempt from the payment of Income Tax would be subject to Tax Deduction at Source.

   4. What is the rate of Tax Deduction at Source?

      The rate of Tax Deduction at Source is 5%.

   5. Is there a minimum threshold for Tax Deduction at Source?

      Yes, Rs 500

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8. PAYMENTS ON CONTRACTS FOR PROCUREMENT OF GOODS & SERVICES

   1. Which contracts are subject to Tax Deduction at Source?

      Contracts for procurement of goods and/or services are subject to Tax Deduction at Source.

   2. Who should deduct Tax Deduction at Source?

      Ministries, Government departments, local Authorities, statutory bodies and Rodrigues Regional Assembly.

   3. Which payees are subject to Tax Deduction at Source?

      All persons except a body of persons exempt from the payment of Income Tax would be subject to Tax Deduction at Source.

   4. What is the rate of Tax Deduction at Source?

      The rate of Tax Deduction at Source varies as per Sixth Schedule.

   5. Is there minimum threshold?

      Yes, Rs 500

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9. COMMISSION

   1. What is commission?

      Commission includes any sum paid or payable to agent in relation to a commercial transaction. 

   2. Who should deduct tax at source?

      All persons other than individual should deduct tax at source. 

   3. Which payees are subject to Tax Deduction at Source?

      All persons except a body of persons exempt from the payment of income tax would be subject to Tax Deduction at Source. 

   4. What is the rate of Tax Deduction at Source?

      The rate of Tax Deduction at Source is 3%. 

   5. Is there a minimum threshold for Tax Deduction at Source?

      Yes , Rs 500.

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10. PAYMENTS TO CONSULTANTS

    1. Who is a consultant?

       A Consultant means any person who provides advisory and counselling services.

    2. Which payments would not be subject to Tax Deduction at Source under this item?

       1. Services as specified in the Fifth Schedule to the Income Tax Act;

       2. Payments made to a company holding a management licence issued by the Financial Services Commission;

       3. Payments made to an investment adviser holding a licence issued by the Financial Services Commission.

    3. When will provisions of Tax Deduction at Source take effect?

       The Tax Deduction at Source is applicable to payments made on or after 3 October 2022.

    4. What is the rate of the Tax Deduction at Source?

       The rate of Tax Deduction at source is 3%.

    5. Is there a minimum threshold for Tax Deduction at Source?

       Yes, Rs 500.

 Download:

• Annexure 1

Origin Rulings 

• Electronic Origin Ruling List

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If you are dissatisfied with an assessment/ additional assessment/ a revision of loss/ a claim, you may object to the assessment/ additional assessment/ revision of loss/ claim within 28 days of the date of the notice of assessment/ notice of revision of loss/ notice of claim.

The Objections, Appeals & Dispute Resolutions Department will deal with your objection and being an independent directorate, all objections will be dealt with independently, objectively, fairly and in a transparent manner.

A notice of determination of objection will be issued within 4 months of the date on which the objection is lodged.

For more information you may consult our objection guidelines.

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In case you are aggrieved by the determination, you may not later than 28 days from the date of the notice of determination, lodge written representations in accordance with the provisions of law, with the Clerk, Assessment Review Committee.

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