Central Board of Direct Taxes Notification No. 98/2019, Dated: 18th November, 2019.
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Central Board of Direct Taxes Notification No. 98/2019, Dated: 18th November, 2019.

Section 194M
As per the existing provisions of Section 194C and Section 194J, an individual or HUF, who are not liable to tax audit under Section 44AB(a)/44AB(b), shall not be required to deduct tax under the provisions of section 194C & 194J. Due to this many payments made by individuals or HUFs in respect of contractual work (say payment made to builders) or for professional services (say payment made to lawyers) are out of the purview of TDS leading to tax evasion.

To cover up this loophole income-tax act has introduced a new section 194M which requires individuals and HUF not covered u/s 194C & 194J to deduct TDS on payment made 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 section 194d) or brokerage or by way of fees for professional services during the financial year.

The aforementioned section will be applicable from 01st September’2019.

Below are the few important points to be kept in mind regarding section 194M:

  • Who is responsible to deduct tax:Individual or HUF making payment in pursuance of a contract or in the nature of the commission, brokerage or professional fee and are not covered u/s 194C, 194D & 194J.
  • Monetary limit:TDS is required to be deducted only if the sum paid or aggregate of the sum paid during a financial year exceeds Rs 50 lakhs.
  • Rate of TDS:5%
  • The time limit for deposit of tax deducted:Any sum deducted under section 194M shall be deposited within a period of thirty days from the end of the month in which the deduction is made. The payment can be made using a challan cum statement in Form No 26QD.
  • Furnishing of certificate: Every person responsible for deduction of tax under section 194M shall furnish the certificate of deduction of tax at source in Form No.16D to the payee within fifteen days from the due date for furnishing the Challan-cum-statement in Form No.26QD.

How to make payment of TDS deducted u/s 194M:
Go on to the page payment of taxes using link https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp & select form 26QD and fill relevant details and proceed to pay. After payment of taxes save challan details generated on payment of taxes.