Section 194M of Income Tax Act:
- As per section of 194M of Income Tax Act applies when the total amount paid to a resident individual, for carrying out any contractual work or providing any professional service, in a financial year exceeds 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.
Who is required to deduct TDS u/s 194M?
- An individual and/or Hindu undivided family (HUF) has to deduct tax at source under Section 194M who is must not be required to get their books of accounts audited.
- Books of Accounts are required to be audited if total turnover or receipts of a business exceed Rs. 1 crore or where receipts of a profession exceed Rs. 50 lakh
Rate of TDS u/s 194M:
- As per provision of this section TDS will be deducted at the rate of five percent (5%) if the aggregate amount of payment exceeds Rs. 50 Lakh in a particular financial year.
- TDS will be deducted at the rate of twenty percent (20%), if PAN is not available.
Time for Deduction of TDS:
TDS amount will be deducted on the earlier of the following dates:
- At the time of credit of the amount.
- At the time of payment by cash or by the issue of a cheque or draft.
Time Limit on depositing TDS:
TDS should deposited in challan cum statement Form 26QD.
If the amount deducted in the month other than march
The deducted amount deposited within seven days from the end of the month in which the tax deduction is made.
Example
If the amount has been deducted in March 2022, then the TDS will be deposited to the department by 30 April 2023.
If the amount is deducted in March
The deducted amount deposited within on or before April 30 of the next financial year.
Example
If the amount has been deducted paid in the month of July 2022, then the TDS will be deposited to the department by 7 September 2022.
Certificate of Tax Deducted Under Section 194M
- The person who deducts tax under section 194M shall furnish a certificate under Form no. 16D
- The TDS certificate issued to the payee within 15 days of the due date of furnishing the challan cum statement in Form 26QD.
Important terms under section 194M:
Work:
Work includes the following
- Advertising
- Broadcasting and telecasting including production of programs for such broadcasting or telecasting.
- Carriage of goods and passengers by any mode of transportation, other than railways.
Catering. - Manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer. But does not include manufacturing or supplying a product according to the requirements or specifications of a customer by using material purchased from a person, other than such a customer.
Professional services:
Professional service means
- Professional fees
- Fees for technical services
- Remuneration paid to directors excluding salary (For example, sitting fees to attend board meetings)
- Royalty
- Payments in the nature of non-compete fees (i.e., fees paid to not carry on any business or profession for a specified time and within certain geographical boundaries) or fees paid to not share any technical knowledge or know-how.
Contract: This expression includes sub-contract.
