A new section 194M has been introduced with effect from September 1, 2019, in respect of payment made to any resident in a financial year for an amount exceeding Rs 50, 00,000. This section is applicable whether the payment has been made for personal use or for business use.
Who is it applicable for
The section applies to individuals and HUFs who
(1) are not subject to tax audit and
(2) makes a payment exceeding Rs 50 lacs in a financial year
(3) to a resident
(4) for carrying out any work in the nature of a contract or towards professional services
In other words, this section is not applicable to resident individuals or HUF who are subject to a tax audit in the previous year as in such case they would be covered under section 194 C or 194J
Tax rate
TDS shall be deducted at 5%
Due date of payment of Tax
(1) In case the payment is made in March, TDS shall be paid before 30th of April of the next financial year
(1) In case of any other month – before 7 days from the end of the month in which such payment has been made
Other points
Deductor can pay TDS by quoting PAN and is not required to take TAN
This section is not applicable to non-residents
In case the deductee does not have a PAN, TDS shall be at the rate of 20%
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