Section 194M – TDS
- Section 194M proposes that any individual or HUF who avails contractual services or professional services, the payer should deduct TDS at the rate of 5% if the total payable amount exceeds Rs. 50 lakh during the current financial year.
- This section was introduced to increase tax regularity and financial accounting liability among individuals of HUF.
Payments to resident contractors or professionals of over Rs.50 lakh
When an individual or HUF receive services from contractors or professionals and if the payable amount exceeds Rs. 50 lakh for the current financial year, the payer shall deduct TDS at the rate of 5%. The types of payments include:
- Land development
- Construction of Houses
- Marriage expenses such as catering, flower decoration, contracts for transportation
- Event Management expenses
- Advocate fee
- Gardening
- Property maintenance services
- Asset maintenance services
- Harvesting corps
- Payments related to healthcare and hospitals TDS shall be deducted by the concerned payer if the total payable amount exceeds Rs. 50 lakh. The payments include buying a house, car parking fees, maintenance fees, advance fees, electricity and water fees and club membership fees.
Form 26QD – No TAN is required for such person to deduct and deposit TDS to Government. The payment is to be made by the individual by using form 26QD which is a challan cum statement: If the contract or work is not completed at the end of the Financial year then file Form 26QD within 30 days from the end of the Financial Year.
Form 16D – Form 16D is a TDS Certificate issued by a Payer for payment of a commission, brokerage, contractual fee, the professional fee under section 194M. It contains details of the nature of payment and TDS deducted on it.
