New Section 194M and 194N: The Ministry of Finance introduced some new section of TDS such as 194M and 194N for the FY 2019-2020 which are effective from 1 September 2019.
1) Section 194M: TDS on Payment of certain sum by Individual or Hindu undivided family.
- Any person, being an individual or a Hindu undivided family (HUF) and such individual and/or Hindu undivided family (HUF) are not required to get their books of account audited under section 44AB clause (a) and clause (b). U/s 44AB (a) & (b) if total turnover or receipts of business exceed Rs. 1 crore or where receipts of a profession exceed Rs. 50 lakh then required to get their books of account audited.
- It applies when paying any sum to any resident to carry out any work in performance of contract or by way of supply of labour for any work or by way of commission (exclude insurance commission) or brokerage or by way of professional fees exceed Rs. 50 lakh.
- If Individual or HUF required to get books of accounts audited, TDS deductible u/s 194C (TDS on payment to a contractor), 194H (TDS on commission), 194J (TDS on payment for professional fees) , 194D (TDS on insurance commission) then they are not covered under section 194M.
- The Individual or HUF are not required to get TAN (tax deduction and collection account number), they only need to quote PAN under Form 26QD for TDS return cum challan.
- Paying to non-resident are not covered under this section.
- Rate of TDS: 5%.
- This section effective from 1 september, 2019 when aggregate of sum credited (i.e. credited in books of accounts) or paid during a financial year exceeds Rs. 50 lakh.
2) Section 194N: TDS on Payment of certain amounts in cash.
- In this section burden of deduction of TDS on :
- a banking company to which Banking Regulation Act, 1949 applies.
- a co-operative operative society engaged in the business of banking.
- a post office.
- It required to deduct TDS when total payment of sum paid in cash exceed Rs. 1 crore during the financial year to any person (called recipients), from one or more accounts maintained by the recipient with it.
- Rate of TDS: 2%.
- This section shall not apply to any payment made to,
- the Government.
- any banking company or co-operative society engaged in the business of banking or a post office.
- any business correspondent of a banking company or co-operative society engaged in carrying on the business of banking, in accordance with the guidelines issued in this regard by the Reserve Bank of India under the Reserve Bank of India Act, 1934 (2 of 1934);
- any white label automated teller machine operator of a banking company or co-operative society engaged in carrying on the business of banking, in accordance with the authorisation issued by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007 (51 of 2007);
- such other person or class of persons, which the Central Government may, by notification in the Official Gazette, specify in consultation with the Reserve Bank of India.
3) Time limit on depositing TDS and Form Required:
- If TDS deducted u/s 194M then they required to be paid within 30 days from end of the month in which deduction is made.
- In this section 194M we required to file challan-cum-statement in Form No. 26QD and such TDS paid electronically.
- If TDS deducted u/s 194N then they required to be paid with in 7 days from end of the month in which deduction is made.
- In section 194N we required to file TDS return Form No. 26Q
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