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SEC 194M payment to contract non audit

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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8 Replies

Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 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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Nidhi (Chief Accountant) (3150 Points)
Replied 29 July 2020

Is this section applicable to company?

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Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 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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Nidhi (Chief Accountant) (3150 Points)
Replied 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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Sakthi Psn (10 Points)
Replied 29 July 2020

If we forgot to deduct TDS, shall we submit form No 26A

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Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 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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Nidhi (Chief Accountant) (3150 Points)
Replied 29 July 2020

So, if payment is before 01 sep than there is no requirement?

Sagar Patel (Tax and Business Consultant) (11611 Points)
Replied 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

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