{"id":19235,"date":"2020-11-13T15:00:49","date_gmt":"2020-11-13T09:30:49","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=19235"},"modified":"2021-11-11T14:26:39","modified_gmt":"2021-11-11T08:56:39","slug":"section-194m-deducting-taxes-on-payment-to-professionals-and-resident-contractors","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/section-194m-deducting-taxes-on-payment-to-professionals-and-resident-contractors\/","title":{"rendered":"Section 194M \u2013Deducting Taxes on Payment to Professionals and Resident Contractors"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Section 194M exhibits about taxing high valued transactions that occur at a personal level introduced by the government with an aim to cover said transactions under <a href=\"https:\/\/corpbiz.io\/tds-return-filing\"><strong>TDS<\/strong><\/a>.&nbsp; In this blog, we will be providing a brief explanation about section 194M deducting Taxes on Payment to Professionals and Resident Contractors.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/section-194m-deducting-taxes-on-payment-to-professionals-and-resident-contractors\/#What_is_Section_194M\" >What is Section 194M?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/section-194m-deducting-taxes-on-payment-to-professionals-and-resident-contractors\/#Meaning_of_Professional_Services_Contract_and_Work_us_194M\" >Meaning of Professional Services, Contract and Work u\/s 194M<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/section-194m-deducting-taxes-on-payment-to-professionals-and-resident-contractors\/#What_is_the_Eligibility_Criteria_for_Deducting_TDS_under_section_194M\" >What is the Eligibility Criteria\nfor Deducting TDS under section 194M?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/section-194m-deducting-taxes-on-payment-to-professionals-and-resident-contractors\/#Timeline_for_Depositing_TDS\" >Timeline for Depositing TDS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/section-194m-deducting-taxes-on-payment-to-professionals-and-resident-contractors\/#Conclusion\" >Conclusion&nbsp;&nbsp;<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Section_194M\"><\/span>What is Section 194M<strong>?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>An individual and\/or Hindu undivided family has to deduct TDS u\/s section 194M. Such individuals are not under the obligation to audit their account book. The requirement for audit only come into the existence when the turnover of the business surpasses the one crore mark or where the profession\u2019s receipts exceed the limit of fifty lakh rupees. <\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/Section-194M-Infographic-1024x768.png\" alt=\"Section 194M\" class=\"wp-image-19337\" width=\"564\" height=\"423\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/Section-194M-Infographic-1024x768.png 1024w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/Section-194M-Infographic-300x225.png 300w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/Section-194M-Infographic-768x576.png 768w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/11\/Section-194M-Infographic.png 1200w\" sizes=\"(max-width: 564px) 100vw, 564px\" \/><\/figure><\/div>\n\n\n\n<p>It becomes applicable when the annual\nexpenditure related to contractual work and professional services surpasses the\nminimum threshold limit i.e. Rs 50,00,000.<\/p>\n\n\n\n<p>If these individuals are directed to audit their book of accounts, TDS deduction is applied as per the provisions under Section 194C and 194J. Moreover, the individual or <strong><em>HUF<\/em><\/strong><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/HUF\"><strong><em>[1]<\/em><\/strong><\/a><\/sup> who are liable to deduct TDS on payment to a contractor u\/s 194C and 194J on payment on professional fees are not liable to deduct TDS u\/s 194M.&nbsp;<\/p>\n\n\n\n<p>The individual or HUFs who are legal boundation to deduct tax can pay the tax to the government by mentioning the PAN only. Also, they do not need TAN for TDS deduction.&nbsp;Payment to an overseas individual is not covered under this section.&nbsp;<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/benefits-of-tds-return-filing-in-india\/\">All about Benefits of TDS Return Filing in India<\/a><\/mark><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Section 194M&nbsp;on Services or Contractual Work for Personal Use<\/h3>\n\n\n\n<p>The finance bill, 2019 has unveiled the\nSection 194M, regarding TDS related to expenses bear by individual or HUF\nagainst the services or contractual work for personal use. Thus, this section\napplies to personal and business-related payments.&nbsp;<\/p>\n\n\n\n<p>Before the arrival of the aforesaid\nsection, there were no obligations on a person or HUF to deduct TDS in the\nscenarios mentioned above.&nbsp;<\/p>\n\n\n\n<p>Also, the person or HUFs engaged with business activities or any line of work were also no deducting TDS, even when they are reaping monetary benefits. Earlier tax reform didn\u2019t have the provision for taxing payment made to professional fees and contractual works.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Meaning_of_Professional_Services_Contract_and_Work_us_194M\"><\/span>Meaning of Professional Services, Contract and Work u\/s 194M<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>Work<\/em><\/strong>: the term work\nunder this section used in the context of:&nbsp;<\/p>\n\n\n\n<ul><li>Advertising, Broadcasting &amp;\ntelecasting&nbsp;<\/li><li>Carriage of passengers &amp;\ngoods regardless of any transportation mode, other than railways.&nbsp;<\/li><li>Catering.<\/li><li>Manufacturing or supplying of a\nproduct as per the recommendation of the customer. This may include raw\nmaterial purchased from the customer as well.<\/li><\/ul>\n\n\n\n<p><strong><em>Professional services<\/em><\/strong>:&nbsp;The\nterm Professional services in this section cover:&nbsp;<\/p>\n\n\n\n<ul><li>Professional fees<\/li><li>Fees related to technical\nservices<\/li><li>Remuneration paid to directors (omitting\nsalary) for instance: fees to get involved with board meetings<\/li><li>Royalty<\/li><li>Payments in context of\nnon-compete fees, meaning- expenses paid to not to perform any business\nactivities for a specific period of time and within limited geographical boundaries\nor fees paid to not to reveal any technical knowledge.<\/li><\/ul>\n\n\n\n<p><strong><em>Contract<\/em><\/strong>: This term\nincludes sub-contract<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Eligibility_Criteria_for_Deducting_TDS_under_section_194M\"><\/span>What is the Eligibility Criteria\nfor Deducting TDS under section 194M?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Any citizen being an individual or HUF bear\ncertain expenses against professional services or contractual works has to deduct\nTDS under the said Act.<\/p>\n\n\n\n<p>In the view of Union Budget 2019, any\nperson (individual\/HUF) addressing expenses against professional services or\ncontractual work during the financial year, surpassing fifty lakhs in a year\nmust deduct tax at source @ 5 percent. The TDS rate capped at 3.75 percent for\ntransactions from 14 May until 31 March 2021.&nbsp;<\/p>\n\n\n\n<ol><li><strong>Scenarios for the deduction of TDS u\/s 194M<\/strong><\/li><\/ol>\n\n\n\n<p><strong><em>TDS amount will be deducted:&nbsp;<\/em><\/strong><\/p>\n\n\n\n<ol><li>At the time of paying out\nexpenses against services availed.&nbsp;<\/li><li>At the time of cash transfer or\nissuance of cheques as payment.&nbsp;<\/li><\/ol>\n\n\n\n<ul><li><strong>TDS Rate structure under Section 194M<\/strong><\/li><\/ul>\n\n\n\n<p>TDS @ 5% shall be deducted u\/s 194M if the\ntotal cost paid to a resident surpasses the minimum limit i.e. fifty lakh in a\ngiven financial year. The TDS rate is capped at 3.75 percent from 14 May 2020\nuntil 31 March 2021 In the absence of a PAN card of\na deductee, TDS will be charged @ 20%.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Timeline_for_Depositing_TDS\"><\/span>Timeline for Depositing TDS<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>When any expenses are addressed by on\nbehalf of the government- The TDS amount must go to the department on the\npayment day.&nbsp; Where any payment bears by any other individual apart from\nthe government, the TDS must be paid if the following conditions are\nsatisfied:-<\/p>\n\n\n\n<ul><li>If the amount is credited\nbefore 30th April of the next financial year. For instance: if the amount has\nbeen credited in March 2021, the TDS will be credited to the department by 30th\nApril 2021.&nbsp;<\/li><li>In any other month \u2013 within 7\ndays from the end of the month in which the tax deduction is made. For\ninstance, if the amount has been paid in the month of October 2019, then the\nTDS will be deposited by 7 November 2019.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion&nbsp;&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Section\n190M plays a pivotal role in taxing the high-value transactions that occur at a\npersonal level. It certainly helps the tax authorities to curb the flow of the\ntransactions that were previously get escaped easily. Consequently, it will\nhelp the authorities to increase the revenue consistently.&nbsp;<\/p>\n\n\n\n<p>In case if you still have some room for complaints regarding the topic, don\u2019t hesitate to talk to our experts on the same. <a href=\"https:\/\/corpbiz.io\/\"><strong>CorpBiz\u2019s<\/strong><\/a> experts have in-depth knowledge and experience on tax-related matters. Also, this platform provides class-leading services related to government licenses, registrations, and tax-based errands. Even if you have some issues in filing your return, you can give a call to us.&nbsp;<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/form-26q-tds-return-filing-deductions-procedure\/\">Form 26Q: TDS Return filing for Non-Salary Deductions \u2013 Know the Online Procedure<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Section 194M exhibits about taxing high valued transactions that occur at a personal level introduced by the government with an aim to cover said transactions under TDS.&nbsp; In this blog, we will be providing a brief explanation about section 194M deducting Taxes on Payment to Professionals and Resident Contractors. What is Section 194M? An individual [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":19341,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[237],"tags":[1196],"acf":{"service_id":"51"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":4360,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19235"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=19235"}],"version-history":[{"count":8,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19235\/revisions"}],"predecessor-version":[{"id":37792,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/19235\/revisions\/37792"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/19341"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=19235"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=19235"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=19235"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}