CA Vidya Khanna

This Article give the snapshot of the newly inserted sections i.e.  Section 194M and Section 194N in the Finance Act (No. 2), 2019. Also covers Income Tax Notification No. 98/2019 dated 18th November 2019 issued by CBDT.

I. Section 194M of Income Tax Act, 1961

♦ Applicability:-Individual or HUF other than those covered u/s 194C & 194D.(means Individual or HUF who are is not liable to audit u/s 44AB in the preceeding Financial year)

♦ Purpose:- For carrying out any work(including supply of labour) in pursuance of contract or by way of fees for professional services whether for personal purpose or for any other

♦ Recipient:- Resident

♦ Mode:- at the time of credit to the account or payment by cash or by issue of cheque or any other mode, whichever is earlier

♦ Rate:- @5%

♦ Non-Applicability:- Individual/HUF not liable to deduct TDS u/s 194M if the amount or
aggregate amount paid or credited in a Financial year does not exceed Rs. 50,00,000

♦ Requirement:-Individual or HUF shall not be required to obtain Tax deduction account number(TAN) ,i.e., provisions of section 203A shall not apply.

♦ Timeline to pay the Tax deducted:-the sum deducted shall be paid to the credit of Central Government within a period of thirty days from the end of the month in which the deduction is made

♦ Challan Form:- challan-cum-statement in Form No. 26QD

♦ Certificate:-person responsible for deducting shall furnish a certificate of tax deducted at source in Form 16D after generating and downloading on the web portal to the deductee within 15 days from the due date for furnishing the Form No. 26QD.

II. Section 194N of Income Tax Act, 1961

♦ Applicability:-Banking Company to which Banking Regulation Act 1949 applies,co-operative society engaged in the business of Banking,post office

♦ Purpose:- payment in cash from an account maintained by the receipent of an amount exceeding Rs. 1 crore in aggregate during the year.

♦ Recipient:- Any person

♦ Mode:- at the time of payment by cash

♦ Rate:- @2%

♦ Non-Applicability:- Payment made to Banking company,co-operative society engaged in the business of banking, Government, Business correspondent of Banking company,any white label automated teller machine operator of a banking company or co-operative society engaged in the business of banking who are involved in the handling of substantial amounts of cash as part of its business operation or such other persons or class of persons, which the Central Government may, specify by notification in consultation with the Reserve Bank of India.

TDS deducted u/s 194N shall not be considered as an Income of the recipient.

For any query/suggestion/advice, you can contact at VIDYAKHANNA97@GMAIL.COM

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February 2024