Tds U/s 194M
This query is : Resolved
Quick Summary
13 April 2023
One of my client who is individual (not covered under audit) has carried renovation for his personal properties and the payment for the same has been from his personal account. The amount of the same will exceeds Rs 50 Lakhs in coming months.
I just want to confirm whether tds u/s 194m will be applicable (‘work’, ‘contract’) or not?
I just want to confirm whether tds u/s 194m will be applicable (‘work’, ‘contract’) or not?
CA Sanat Pyne
(Expert)
13 April 2023
As per the provisions of Section 194M of the Income Tax Act, TDS at the rate of 5% is required to be deducted by an individual or HUF (not covered under tax audit) if the aggregate payment made to a contractor or professional in a financial year exceeds Rs. 50 lakhs.
In your case, if your client has made payment of more than Rs. 50 lakhs to a contractor or professional for carrying out the renovation work of his personal property, then TDS u/s 194M would be applicable on the payment made. However, if the payment is made to a non-resident contractor, TDS under section 195 of the Income Tax Act would be applicable.
It is important to note that the applicability of TDS under section 194M would depend on the nature of payment made to the contractor or professional. If the payment is for personal purposes and not for business or profession, TDS u/s 194M would not be applicable.
In your case, if your client has made payment of more than Rs. 50 lakhs to a contractor or professional for carrying out the renovation work of his personal property, then TDS u/s 194M would be applicable on the payment made. However, if the payment is made to a non-resident contractor, TDS under section 195 of the Income Tax Act would be applicable.
It is important to note that the applicability of TDS under section 194M would depend on the nature of payment made to the contractor or professional. If the payment is for personal purposes and not for business or profession, TDS u/s 194M would not be applicable.
13 April 2023
If the payment is for personal purposes and not for business or profession, TDS u/s 194M would not be applicable.
Above line is confusing. The payment made is for personal property only.
Further i would like to elaborate the query. We have made the advance to contractor and the same was paid in FY 22-23 and the estimate kept on changing from time to time. We are yet to receive final invoice of the same. At what time i should deduct Tds
Above line is confusing. The payment made is for personal property only.
Further i would like to elaborate the query. We have made the advance to contractor and the same was paid in FY 22-23 and the estimate kept on changing from time to time. We are yet to receive final invoice of the same. At what time i should deduct Tds
CA Sanat Pyne
(Expert)
13 April 2023
"If the payment is for personal purposes and not for business or profession, TDS u/s 194M would not be applicable."
This should be deleted.
As per section 194M, tax has to be deducted at source where the amount credited or paid to a contractor exceeds Rs.50 lakhs in aggregate during the financial year. So When the amount exceeds you have to deduct TDS.
Suppose Mr.X, a salaried employee, makes the following payments during FY 22-23:-
Paid 70 Lakhs to the contractor on 30th June 2022 for building construction.
Paid 51 Lakhs to Interior Decorator on 1st February 2023
Paid 20 Lakhs to Painter on 1st February 2023.
What is the amount of TDS to be deducted by Mr.X?
The tax to be deducted by Mr.X is as follows:-
Particulars Amount Rate Amount of TDS
Construction 70 lakh 5% 3,50,000
Interior work 51, lakh 5% 2,55,000
Painting 20 lakh 5% – nil
This should be deleted.
As per section 194M, tax has to be deducted at source where the amount credited or paid to a contractor exceeds Rs.50 lakhs in aggregate during the financial year. So When the amount exceeds you have to deduct TDS.
Suppose Mr.X, a salaried employee, makes the following payments during FY 22-23:-
Paid 70 Lakhs to the contractor on 30th June 2022 for building construction.
Paid 51 Lakhs to Interior Decorator on 1st February 2023
Paid 20 Lakhs to Painter on 1st February 2023.
What is the amount of TDS to be deducted by Mr.X?
The tax to be deducted by Mr.X is as follows:-
Particulars Amount Rate Amount of TDS
Construction 70 lakh 5% 3,50,000
Interior work 51, lakh 5% 2,55,000
Painting 20 lakh 5% – nil
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