Tax Deduction under section 194M

[PRIYAM KHAMBHATA]

Respected Sir

Please guide me on my query state as under

Whether TDS Provision under section 194M is applicable to an Individual, who is doing construction works on his Land. The amount of construction work is exceeding of Rs. 50 Lakh during the year under consideration. There is no execution of Contract Agreement between Individual and Contractor.

Thanks

[YAGAY andSUN]

Section 194M of the Income Tax Act applies to individuals or Hindu Undivided Families (HUFs) who are not required to deduct TDS under sections 194C or 194J, but who make payments exceeding ₹50 lakh in a financial year to a resident contractor or professional for carrying out any work, including construction. The applicability of TDS under this section does not depend on whether there is a formal written contract; even in the absence of a contract agreement, if the individual pays more than ₹50 lakh for construction work to a contractor during the financial year, TDS at the rate of 5% is required to be deducted under Section 194M.

Therefore, in your case, even though there is no formal contract executed between the individual and the contractor, the nature of payment for construction work and the threshold being crossed makes Section 194M applicable. The individual must obtain a Tax Deduction Account Number (TAN is not required under 194M) and deposit the TDS using Form 26QD within 30 days from the end of the month in which the payment is made.

AI Summary

Homeowners Doing Construction Work Over Rs. 50 Lakh Must Deduct 5% TDS for Resident Contractors Under Section 194M An individual undertaking construction work on personal land exceeding Rs. 50 lakh is subject to TDS provisions under section 194M of the Income Tax Act. Despite absence of a formal contract, the individual must deduct 5% TDS when payments to a resident contractor surpass the specified threshold. Deposit of TDS using Form 26QD is required within 30 days from the month of payment.