Section 194M - TDS on payment to resident for certain services

Section 194M deals with TDS on payment to residents for certain specified transactions by individual or Hindu Undivided Family (HUF). In case Individual or HUF is liable to Tax Audit then they are required to deduct TDS under section 194C, 194J and 194H as applicable.

Let us get a brief idea about applicability of section 194M.



TDS under Section 194M of Income Tax
EFFECTIVE DATE

Section 194M is effective from 01st September 2019. TDS amount will be deducted on payment made after 01st September 2019 even if the contract is in existence before 01 Sept 2019 if payment amount exceeds Rs.50,00,000/- in a financial year. We will see in details about applicability in later part of this topic.



SECTION 194M IS APPLICABLE TO WHOM?

Section 194M is applicable to:

  • Individual

  • HUF

who are Indian Resident and not liable for tax audit.


WHEN IS TDS REQUIRED TO BE DEDUCTED UNDER SECTION 194M?

TDS under section 194M is required to be deducted when:

  • Payment is made to Resident.

  • Payment is made for Contractual Working (including supply of labour) or Professional Services or by way of commission (not on insurance Commission).

  • Amount paid is more than Rs.50,00,000/- to a single recepient in a financial year.

  • Payer is not liable for Tax Audit.

WHAT IF INDIVIDUAL OR HUF (PAYER) IS LIABLE FOR TAX AUDIT?

In case Individual or HUF who is required to make payment to Indian resident, and such Individual is liable for Audit, in such case Individual/HUF is required to deduct TDS under Section 194C, Section 194J, Section 194H as applicable.


REQUIREMENT OF TAN

For the purpose of TDS under this section, Deductor is not required to obtain TAN. The payment can be made online in Form No. 26QD which fulfills the need of challan as well as statement of Deduction.


WHEN TO PAY TDS UNDER SECTION 194M?

TDS under section 194M is to be paid within period of 30 days from the end of the month in which TDS is deducted in Form 26QD. Later within 15 days deductor is required to furnish certificate of deduction of Tax in Form No.16D to the recipient.


ABOUT AUTHOR:

Amish Maknojia is CA Aspirant and Master of Commerce from Mumbai University.He is currently practicing independently as Tax Consultant in Mumbai. He is enthusiastic entrepreneur to motivate young entrepreneurs by providing simplified solution to the complex compliance structure and legal formalities.


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