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Section 194M of Income Tax Act
Section 194M of Income Tax Act
Update :-
Union Budget 2019 –
Which was presented by our Hon’ble Finance Minister Smt. Nirmala Sitharaman Ji.
Which was obtained the Assent of our beloved President of India on 01st August 2019, Sri Ram
Nath Kovind Ji.
Proposes to make it mandatory for Individuals and HUFs to deduct tax at source (TDS) on any
payment exceeding Rs 50 lakh per annum to contractors and professionals.
Example: This would mean that if the total of payments to any single contractor for wedding
functions, house renovation or to a single professional during a financial year exceeds Rs 50
lakh then TDS @ 5% (20% in case of non-submission of PAN) would be deductible by the payer.
Rule of Thumb: At the time of Credit of the sum or payment whichever is earlier.
The provisions of newly inserted section 194M of the Income Tax Act, 1961 shall be effective
from 1st September 2019.
General Doubt :-
Since the above mentioned rule is already prevalent in the existing sections of TDS like 194C
for contractual payments, 194H for commission payments, 194J for professional charges etc.,
where is this section going to make a difference in?
Difference is being made –
The above mentioned sections (194 –C, H, J) (however insurance commission referred in
section 194D is not included) are applicable to all the persons (as defined in the Act) excluding
Individual/HUF who are not liable to get their accounts audited u/s 44AB of the Act.
The Section 194M covers those persons who all are excluded in the aforementioned sections
(i.e. Individual/HUF who are not liable to get their accounts audited u/s 44AB of the Act).
In Brief –