TDS ON PAYMENTS BY INDIVIDUALS - SECTION 194M

Section 194M of the Indian Income Tax Act casts responsibility for TDS deduction on certain individuals and HUF in respect of payments of certain sums.

We shall discuss the same here.

Applicable to which Individuals and HUF?

As per this Section, any Individual or HUF (other than the ones who are required to deduct tax as per the provisions of Section 194C, 194H and 194J) are covered in this. Therefore any Individual and HUF whose turnover from business does not exceed Rs.1 Cr and whose Receipts from Profession are below 50 lacs are covered in this Section.

TDS to be deducted from whom? and what is the basic exemption limit?

As per this Section, any individual and HUF (other than above) who is paying any contractual sum, commission, or fees for professional services to a resident is required to deduct TDS at the rate of 5% of such sum.

However, no TDS is required to be deducted if the aggregate of payments made during the year is 50 lacs or less. Thus there is no liability to deduct TDS if the payment made in respect of the above services is equal to or less than 50 lacs during the Financial year.

The meaning of Works Contract, Commission/Brokerage, and Professional Services for this section will be the same as defined in Sections 194C, 194H, and 194J as already discussed in our other articles.

Please refer to the same.

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