TDS deduction requirement

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This discussion clarifies whether Tax Deducted at Source (TDS) is required even when opting for presumptive taxation schemes like 44AD or 44ADA. It confirms that TDS obligations generally apply if payment thresholds are met, irrespective of book maintenance. The conversation also addresses TDS on construction costs, highlighting Section 194M for payments to resident contractors and professionals, with specific limits of ₹50,000 per transaction or ₹2,50,000 aggregate annually, and outlines potential interest and penalties for non-compliance.

Anu

Anu (Querist)
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23 December 2024 Kidnly clarify the queries:

Is TDS required to be deducted in cases where 44AD / 44ADA is availed, where maintenance of books is not required?

Also is TDS required to be deducted on construction costs incurred by assessee? If yes, how will the disallowance apply, since this is not a revenue expenditure to make disallownce from profit?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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23 December 2024 Yes, TDS is required to be deducted even if the taxpayer avails of the presumptive taxation scheme under sections 44AD or 44ADA and is not required to maintain books of accounts. The provisions of TDS (sections 192 to 196D) are applicable if the specified conditions are met, such as payment exceeding the threshold limit.

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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23 December 2024 TDS under Section 194C is not applicable to individuals and Hindu Undivided Families (HUFs) if they are not required to get their accounts audited under Section 44AB.
TDS is required to be deducted u/s. 194M on payments made to resident contractors or professionals for services rendered, including construction, if the payment exceeds ₹50,000 in a single transaction or ₹2,50,000 in aggregate during the financial year.
If an individual or HUF fails to deduct TDS under Section 194M or deducts TDS but fails to deposit it with the government, they may be liable to pay interest and penalty. The interest rate is 1% per month or part of the month on the amount of TDS that was not deducted or deposited. In addition, a penalty of up to Rs. 10,000 may be levied under Section 271C of the Income Tax Act, 1961.

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Anu

Anu (Querist)
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24 December 2024 Limits u/s 194M is upto 50 lakhs contract payments?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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24 December 2024 Yes, for single payment Rs. 50,000/-; otherwise for aggregate it is Rs. 2.50 lakhs in a FY.

Anu

Anu (Querist)
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26 December 2024 can you please share screenshot showing limit of 50k / 2.5 lakhs? is it a separate notification?

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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26 December 2024 I agree to ratify my above mistake which was for rent u.s 194 IB & 194IA.
For sec. 194M the threshold limit is 50 lakhs.
Thanks for the suggestion.

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