Clause 46 - Insertion of new sections 194M and 194N.

Tax deduction at source: individuals/HUFs and banks must deduct on specified payments once statutory cash and payment thresholds are exceeded.

Section 194M requires certain individuals and Hindu undivided families to deduct tax at a five per cent rate when paying or crediting sums to residents for work, commission/brokerage, or professional services, subject to an aggregate yearly exemption threshold and excluding application of section 203A to such deductors. Section 194N obliges specified banks, co-operative societies and post offices to withhold a lower fixed rate on cash payments from one or more accounts that exceed the statutory cash threshold in a previous year, while enumerating exempt recipient classes and allowing further exemptions by Central Government notification in consultation with the Reserve Bank.