Section 194M – TDS on payment to resident contractors and professionals.


The Finance bill 2019, Introduced sec 194M effective from 1st sept 2019.


Before introduction of this section individual/ HUF who are not liable to Audit under 44AB were not deducting TDS & were creating tax evasion.

What is Sec 194M??

Sec 194M deals with Tax Deducted at source (TDS) by Individual or HUF if they are not liable to get books of accounts audited.

Because, In case Books are audited under Sec-44AB. Then they need deduct TDS under Sec-194C (TDS on payment to a contractor) & 194J (TDS on payment on professional expenses) then 194M will not be applicable.

It means Sec-194M is applicable if books of accounts are not audited for individual/HUF

Contract work means

  • Advertising
  • Broadcasting and Telecasting
  • Carriage of goods and passengers
  • Catering
  • Manufacturing or supplying customer specific product

Professional service means

  • Professional fees
  • Technical services
  • Sitting fee to director
  • Royalty/li>

FAQ :- 1

Q. Payment to non-Resident Individual/HUF is covered under 194M?

Ans :- No Non-Resident are not covered under 194M.They are covered under Section 195

Sec-194M Applicability & Rate

It applies when total amount paid exceeds Rs.50 Lakh in a year as professional fees or contractual work

TDS rate under 194M is 5% & 20% in case of Non-Availability of PAN.

TDS amount will be deducted on any payment made after 1st sept 2019 even if the contract existed before, provided the payment exceeds Rs 50,00,000

FAQ :- 2

Q. TAN Number mandatory for payment of TDS under 194M to government?

Ans :- No TAN Number is not mandatory for TDS payment to government instead they pay by quoting their PAN Number through traces.

Disclaimer:"The information contained herein is only for informational purpose and should not be considered for any particular instance or individual or entity. We have obtained information from publicly available sources, there can be no guarantee that such information is accurate as of the date it is received or it will continue to be accurate in future. No one should act on such information without obtaining professional advice after thorough examination of particular situation."

Prepared By

Umesh B