TDS - 194M or 194C

[Ethirajan Parthasarathy]

Section 194M provides for TDS rate of 5% on contracts exceeding ₹ 50 lakh limit entered into by an Individual

The question is whether an individual who is subject to 44AB audit, is liable to deduct tax under Sec.194C or Sec.194M in respect of contract for construction of Godown which is intended to be let out.

Will the answer be different if the contract is for construction of proprietor’s residence?

[subhash sb]

If the Individual is subject to 44AD and has TAN number then he can deduct u/s 194C, if the Inddividual is subject to 44AD and don't have tan number then he has to deduct at 194M since the payment u/s 194M is based on the PAN number.

If the same is for proprietor's residence then it's under 194M

AI Summary

TDS on contract payments depends on TAN presence and audit status, directing withholding under contractor or PAN based rules. TDS on construction contract payments depends on the payer's audit or presumptive regime status and on whether the payer holds a TAN; if a TAN is held, the conventional contractor withholding mechanism applies, whereas absence of a TAN requires PAN based withholding. Payments for construction of a proprietor's residence are treated under the PAN based withholding mechanism rather than the contractor withholding route.