(Q.1)What is TDS on 'PAYMENTS TO RESIDENT CONTRACTORS AND PROFESSIONALS'?
- As per Finance Bill of 2019, new section 194M has been introduced. As per the section, if the 'PAYMENTS TO RESIDENT CONTRACTORS AND PROFESSIONALS' exceeding 50,00,000 during the year, the Payer / Deductor has to deduct tax at the rate of 5% from the sum payable to a resident Payee/Deductee.
Note :- From 1st October, 2024 onwards the rate has been revised 2% from 5%. (Q2.)What is Section 194M?
- Section 194M: Any person being an individual or a Hindu undivided family (other than those who are required to deduct income-tax as per the provisions of section 194C, section 194H or section 194J) responsible for paying any sum to any resident for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract, by way of commission (not being insurance commission referred to in section 194D) or brokerage or by way of fees for professional services during the financial year, shall deduct the tax at the time of credit of such sum or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.
Threshold Limit: 50 Lakh (amount paid/credited during a financial year).
Rate: 5%.
Note :- From 1st October, 2024 onwards the rate has been revised 2% from 5%.
For more details, please visit www.incometaxindia.gov.in website. (Q3.From when Section 194M is applicable?
- Section 194M is applicable from 1st September 2019.
(Q4.)Who is responsible to deduct the TDS on PAYMENTS TO RESIDENT CONTRACTORS AND PROFESSIONALS u/s 194M?
- The Payer/Deductor being an Individual or a HUF (not liable to audit u/s 44AB) would have to deduct the TDS and deposit the same in Government treasury.
(Q5.)How to deposit the TDS deducted u/s 194M?
- Payer (who has deducted tax) will file 26QD Challan-Cum-Statement from website www.incometax.gov.in
Note:
1. Payer has to pay TDS through Challan ITNS-280 with Minor Head Code '800'
2. In case of non-resident deductee(s), Deductor has to pay TDS through Challan ITNS-281 (Q6.)What is the due date of deposit TDS u/s 194M?
- Any sum deducted under section 194M shall be paid to the credit of the Central Government within a period of thirty days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum-statement in Form No. 26QD.
In case of Non-Residents: On or before seven days from the end of the month in which the deduction is made. (Q7.)Which form type Payer/Deductor needs to file for tax deducted u/s 194M?
- Payer needs to file Form-26QD Challan-cum-statement for reporting the transactions liable to TDS on PAYMENTS TO RESIDENT CONTRACTORS AND PROFESSIONALS under section 194M of the Income-tax Act, 1961. It is an online form available on the www.incometax.gov.in website.
(Q8.)In case of Non-Resident Deductee (Payee), which form type Payer/Deductor needs to file for tax deducted u/s 194M?
- Deductor needs to file Form-27Q for non-resident Deductee, where Deductor has to obtain TAN to file Form-27Q.
For further information related to Section 194M please refer Notification No. 98/2019 available on www.Incometaxindia.gov.in
