Applicability of Section 194M

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..... Applicability of Section 194M
Query (Issue) Started By: - Ethirajan Parthasarathy Dated:- 26-12-2023 Last Reply Date:- 2-1-2024 Income Tax
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Income Tax
A salaried person enters into contract for construction of his residence. The contract amount is Rs.1,10,00,000/- The contractor gives running bills. During Account year 2022 - 23, he has given bills aggregating to 40,00,000 .....

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..... /- lakhs and during 2023 -24 he has given bills aggregating to 70,00,000/- lakhs. Payments are made immediately. In my opnion, no tax needs to be deducted during 2022 -23 since the amounts "Paid" during the year is below 50,00,000/- lakhs and TDS u/s 194M is to be done only on whole of 70,00,000/- lakhs "paid" during 2023 -24. Is my view correct since u/s 194M lays emphasis on "amount paid" and .....

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..... not the contract amount. (Q 1) While reporting TDS in Form No.26QD, we have to mention the total value of contract, which is Rs. 1,10,00,000/- in the given case while TDS is done only on 70,00,000/- lakhs. This may tigger some notice from department for short deduction. Section 194M provides for TDS to be done at the time of credit or payment whichever is earlier. Section 194M covers only non bu .....

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..... siness entities. In the light of above, it is not clear how and when TDS can be demanded on the basis of "Provision" (Q2) In a situation where the contractor gives bill for certain amount, say on 25 March 2023 but payment is made only on 4 April 2023 is TDS to be done and reported for AY 2023 -24 or 2024 -25. (Q3) Reply By DR.MARIAPPAN GOVINDARAJAN: The Reply: In my view your Q1 is correct si .....

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..... nce Section 194M lays emphasis on amount paid. Q2. Even notice received in this case you may explain the same. Q3. You may make provision in 2023-24 and made TDS and payment the amount in 2024 - 25.
Discussion Forum - Knowledge Sharing .....

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