Applicability of TDS u/s 194M

This query is : Resolved

SUMAN THAKUR (Querist)
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26 March 2024 Dear All,

Please confirm the Applicability of Sec 194M.

Taxable Amount 48,55,424
Add: GST Amount 8,73,976
Total Invoice Value: 57,29,400

Please advise applicability of TDS u/s 194M and tds amount
please share any case laws reference

Suman Kumar
Thanks

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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06 July 2024 Section 194M of the Income Tax Act, 1961 pertains to TDS (Tax Deducted at Source) on payments made to a resident contractor or professional by an individual or a Hindu Undivided Family (HUF) not subject to tax audit. Here’s how it applies to your scenario:

Applicability of Section 194M:

1. Nature of Payment: Section 194M applies to payments made to a resident contractor or professional by an individual or HUF for carrying out any work (including supply of goods or services) in the course of carrying on business or profession.
2. Threshold Limit:
• Section 194M requires TDS to be deducted if the total amount paid or credited during the year exceeds Rs. 50 lakhs.
• If the payments to a single contractor or professional exceed Rs. 50 lakhs in a financial year, TDS at the rate of 5% is applicable under Section 194M.
3. Your Scenario:
• Taxable Amount: Rs. 48,55,424/-
• GST Amount: Rs. 8,73,976/-
• Total Invoice Value: Rs. 57,29,400/-

Given that the total payment (excluding GST) is Rs. 48,55,424/-, which is below the threshold limit of Rs. 50 lakhs, Section 194M would not apply in this case. TDS is not required to be deducted under Section 194M since the threshold of Rs. 50 lakhs is not exceeded.

Based on the details provided:

• Section 194M does not apply since the total payment to the contractor or professional is below Rs. 50 lakhs during the financial year.
• No TDS needs to be deducted under Section 194M for the payment of Rs. 48,55,424/-.