TDS application

First year of Tax Audit for existing business:

An individual is exempted from deducting TDS under section 194A/C/H/I/J, if tax audit was not applicable during the F.Y. immediately preceding the F.Y. in which income is paid/credited.

First year of Tax Audit for new business:

Tax audit was not applicable during the F.Y. immediately preceding the F.Y. in which income is paid/credited, as the business was not in existence. Hence, liability to deduct TDS in case of aforesaid sections does not arise even if the turnover crosses the threshold specified u/s 44AB during the first year of business.

Reference:

• Proviso to Sec. 194A(1)
• Explanation(i)(l)(B) to Sec. 194C(7)
• Second Proviso to Sec. 194H
• Second Proviso to Sec. 194I
• Second Proviso to Sec. 194J(1)