SEC 194M payment to contract non audit

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10 Points Posted on 28 July 2020
Rate of TDS

example : payment to party rs 1Crore

now TDS will deduct on 50lakh or on 1crore

what tds rate from 14th May 2020
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On 28 July 2020 at 23:57 Report
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Quick Summary
Section 194M of the Income Tax Act mandates a 5% TDS deduction on payments made by individuals or HUFs (who are not liable for audit) to contractors, provided the aggregate payments exceed ₹50 lakh in a financial year. This rate was reduced to 3.75% after 14th May 2020. The section is effective from 1st September 2019, and TDS applies to payments made after this date, even if the contract predates it. Companies are not covered under this section and must adhere to other relevant TDS provisions.

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Tax and Business Consultant
11616 Points Posted on 29 July 2020
If Payment made to contractor by Individuals/HUF (Non audit) under section 194M then you required to deduct TDS @ 5% on total sum ,if amount exceed 50 in a Financial year.

So, you have to Deduct TDS on full 1 cr @ 5%.

Reduce rate after 14th May, 2020 is 3.75%
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On 29 July 2020 at 01:17
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Chief Accountant
3150 Points Posted on 29 July 2020
Is this section applicable to company?
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On 29 July 2020 at 17:20
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Tax and Business Consultant
11616 Points Posted on 29 July 2020
No, this section is not applicable to company because company has required to deduct tax under section 194C/194J/194H as the case may be
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On 29 July 2020 at 17:23
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Chief Accountant
3150 Points Posted on 29 July 2020
Is this section applicable only when payment made more than 50 lac

this section applicable from which date?
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On 29 July 2020 at 17:30
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10 Points Posted on 29 July 2020
If we forgot to deduct TDS, shall we submit form No 26A
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On 29 July 2020 at 17:32
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Tax and Business Consultant
11616 Points Posted on 29 July 2020
Yes, this section is applicable only when your payment exceed the limit of 50,00,000/- in a Financial year.

Section 194M will be effective from 1 September 2019 onwards. TDS amount will be deducted on any payment made after this date even if the contract existed before, provided the payment exceeds Rs 50,00,000.
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On 29 July 2020 at 17:33
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Chief Accountant
3150 Points Posted on 29 July 2020
So, if payment is before 01 sep than there is no requirement?
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On 29 July 2020 at 17:47
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Tax and Business Consultant
11616 Points Posted on 29 July 2020
@ Nidhi ji
This section is applicable w.e.f 01 September, 2019...so if you made any payment before this date, than there is no requirement to deduct TDS, but after this date for calculation of threshold of 50lakh you have to consider that amount also.

@ Sakthi ji
Yes, if you forget to deduct TDS, than you can submit form 26A
1 Reply
On 29 July 2020 at 17:53

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