TDS Amendments as per Budget 2019

The Budget 2019 has proposed various amendments in Income Tax laws. The Budget also introduced new sections regarding TDS applicability on some payments made by the taxpayers. The Government of India has introduced 194M and 194N as new sections under TDS provisions.

194M: TDS on payments made by individual/HUF for contact work or professional fee or commission or Brokerage

Applicability: Any individual or HUF who is liable to pay the following payments should deduct tax

For Carrying out any Works Contract
By way of Commission or Brokerage
Fees for Professional Services

Individuals or HUF who are required to deduct tax u/s 194C, 194H and 194J should not deduct Tax under 194M.

Threshold Limit: TDS should be deducted on payments exceeding Rs 50 Lakhs in a financial year

Rate of TDS: The rate of TDS on above payments is 5%

Time of Deduction: The tax should be deducted at the time of credit of such sum or at the time of payment of such sum, whichever is earlier.

Note: TAN is not required for deducting TDS under this section. It can be done on PAN

194N: TDS on Cash Withdrawal

Applicability: The following persons should deduct tax u/s 194N

Banking Company
A Cooperative society engaged in the business of banking
Post Office

Threshold Limit: TDS should be deducted on payments made exceeding Rs 1 crore during the previous year to any person from one or more accounts maintained by such recipient person with above.

Rate of TDS: The rate of TDS on above payments is 2% of sum exceeding Rs 1 crore

194IA: TDS on transfer of Immovable Property other than agricultural land

The word Consideration is not defined earlier. Now the word consideration for transfer includes all charges of the nature of club membership fees, car parking fee, electricity or water facility fee, maintenance fee, advance fee or any other charges of similar nature which are incidental to transfer of the property.

Applicability: Every Transferee who is liable to pay any sum as consideration for transfer of immovable property shall deduct tax at 1% of such sum

Threshold Limit: TDS should be deducted on payments where the total amount of consideration is more than 50 lakhs

194IA: TDS on Rent

Revision in Threshold limit: The threshold limit for deducting TDS on Rent has been increased w.e.f 01/09/2019. The revised threshold for deducting TDS on rent is Rs 2,40,000. Earlier the limit was Rs 1,80,000 for deducting TDS

194DA: TDS on Payments in respect of life Insurance Policy

Revision in rate: Earlier the TDS deducted on payments in respect of life insurance policy is 1%. But w.e.f 01/09/2019, the rate of TDS to be deducted on above payments is 5%