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?

AI Summary

Clarification on TDS for Construction Contracts: Use Section 194C with TAN, Section 194M without TAN, based on PAN. An individual subject to a 44AB audit inquired about the applicable TDS section for a construction contract exceeding 50 lakh, specifically whether to apply Section 194C or 194M. The contract involves constructing a godown intended for lease. The response clarified that if the individual is under 44AD and has a TAN, TDS should be deducted under Section 194C; without a TAN, Section 194M applies, based on the PAN. For a contract involving the construction of a proprietor's residence, Section 194M is applicable.