Table of Contents
1. Section 194M of the Income Tax Act, 1961
Section 194M contains provisions relating to TDS on payments made by individuals or HUF in pursuance of a contract or by way of commission or brokerage or by way of fees for professional services during the Financial Year.
2. Who is responsible to deduct tax under this section?
An individual or HUF, other than those required to deduct tax under section 194C or 194H or 194J is responsible to deduct tax under section 194M.
3. What is the rate at which tax should be deducted under this section?
- As per Section 194M, TDS shall be deducted at the rate of 5%.
- If the payee fails to furnish PAN, tax should be deducted at the rate of 20%
- Surcharge and cess shall not apply on the above mentioned rate.
4. What is the maximum limit upto which no tax needs to be deducted under section 194M?
No tax needs to be deducted when such payment or aggregate amount of payments made to a resident does not exceed Rs.50 lakhs in a financial year.
5. When should tax be deducted under section 194M?
Tax should be deducted at the time of credit of such amount to the account of the payee or at the time of payment whichever is earlier.
6. Should the persons responsible to deduct tax under section 194M obtain a TAN number?
Persons responsible to deduct tax under this section are not required to possess or obtain a TAN (Tax Deduction account number) for the purpose of deducting tax under this section.
7. What is Form 26QD?
- The person responsible to deduct tax shall furnish details in Form 26QD within 7 days from the end of the month in which tax has been deducted (April 30th for tax deducted during the month of March).
- Form 26QD is a challan cum statement containing details of tax deducted at source under section 194M.
8. Certificate of Tax deduction under section 194M:
The person who deducts tax under this section is responsible to furnish a certificate in Form 16D to the payee within 15 days of due date of furnishing Form 26QD.