Section 194M- TDS on payment to residents contractors and residents

  • 1. Any person, being an individual or a Hindu Undivided Family, responsible for paying any sum to a resident, for carrying out any work under any contract or by way of fees for professional services rendered during the financial year.
  • 2. Provided that no such deduction under this section shall be made if such sum or, as the case may be, aggregate of such sums, credited or paid to a resident during the financial year does not exceed Rs. 50,00,000.
  • 3. Section 194M shall not be applicable on those individual/ HUF who are required to deduct TDS under section 194C and 194J.
  • 4. TDS shall be deducted @ 5% of such sum.
  • 5. TDS shall be deducted at the time of credit of such sum or at the time of payment of such sum, or aggregate of sums, whichever is earlier.
  • 6. Payments to non-residents are not covered under this section.
  • 7. The individual or HUFs who has to deduct tax can pay the tax to the government by quoting his or her PAN only. Individual or HUF is not required to obtain TAN.
  • 8. This section will be effective from 1st September 2019. TDS amount will be deducted on payments made after this date even if contract exist before, provided the payments exceeds Rs. 50,00,000.
  • 9. Time limit on depositing TDS:
    • 1. When any payment is made by or on behalf of the government- The TDS amount will have to be paid to government on the day of the payment.
    • 2. Where any payment is made by any other person apart from the government:
      • (i) If the amount is paid in march- On or before April 30 of the next financial year.
      • (ii) In any other month- Within 7 days from the end of the month in which the tax deduction is made.
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