SECTION 194M TDS ON PAYMENT TO RESIDENT CONTRACTORS OR PROFESSIONALS
The Union Budget On 5th July 2019 proposed new sections 194M which came into existence from 1st September 2019.
An individual or Hindu undivided family (HUF) has to deduct TDS under Section 194M. Such individuals and HUF is not required to get their books of accounts audited.
This section is applied when the total amount paid for carrying out any contractual work or providing any professional service, in a financial year which is exceeding more than Rs.50,00,000.
The individual and/or HUF who have to deduct TDS under Section 194C (TDS on payment to a contractor) and 194J (TDS on payment on professional fees) do not have to deduct tax at source under Section 194M.
Person liable to deduct Tax under section 194M:
The Time Limit for TDS under Section 194M:
TDS under section 194M will be deducted on the earlier of the following dates:
The time limit for depositing TDS under section 194M:
Payments covered under section 194M:
POINTS TO BE REMEMBERED BY THE PAYER/DEDUCTOR:
POINTS TO BE REMEMBERED BY THE PAYEE/DEDUCTEE:
FAQs TDS on payment of Resident of Contractors or Professionals:
1. A made a payment of Rs.55 Lakh for professional services on 05th September 2019. Whether TDS will be deducted in this case and if yes, on what amount?
Ans: In the above case, TDS will be deducted as the amount of payment exceeds Rs. 50 Lakh and TDS will be deducted on Rs. 55 lakh @ 5% i.e. 2.75 Lakhs.
2. Rahul entered into a contract of catering on 25th July 2019, and payment made of Rs. 55 Lakh on 30 August 2019. Whether TDS will be deducted in this case?
Ans: In this case, the contract was entered before 01st September 2019 but payment was made before 01st September 2019 hence TDS will not be deducted
3. Shree made a payment of professional fees of Rs. 55 Lakh and Shree is liable to get his accounts audited under section 44 AB. Whether TDS is required to be deducted under this section?
Ans: As per this section, individuals who are required to get their accounts audited are not covered hence TDS will not be deducted under this section.
4. An individual receives a bill of catering of Rs. 42 Lakh and a bill of consultancy of Rs. 10 Lakh from one single person. Whether TDS will be deducted?
Ans: The threshold limit of Rs. 50 Lakh is an aggregate limit for both professional and contractual work hence TDS will be deducted. So. TDS will be deducted on 52 Lakh @ 5% i.e. 2.60 Lakh
5. How deductee will get the credit/refund of the tax deducted?
Ans: When tax is deposited to the government through challan, the tax will appear in 26AS of the deducted, and deductee can claim credit of TDS.
6. How to pay the TDS amount to the government under this section?
Ans: Every person responsible for deduction of tax under section 194M shall furnish the certificate of deduction of tax at source in Form No. 16D to the payee within fifteen days from the due date for furnishing the challan-cum-statement in Form No. 26QD under rule 31A after generating and downloading the same from the web portal specified by the Principal Director General of Income-tax (Systems) or the Director-General of Income-tax (Systems) or the person authorized by him
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