Changes in the TDS provision via the Finance bill,2019 passed by the Lok Sabha and Interim Budget, 2019

Sec 194M (new section): TDS on payment surpassing Rs 50 lakhs to either a Contractor or a Professional by Individual/HUF (This is applicable w.e.f. 01/09/2019)

New Section inserted after Sec 194LD:

(1) Any person, who is an individual or an HUF Hindu (other than those people who must deduct income-tax according to the provisions of section 194C, 194H or 194J) is responsible to pay any sum to any resident who carries out any work (inclusive of supplying labour for conducting any work) by way of a contract or commission (does not refer to insurance commission as indicated in section 194D) or brokerage or by fees for any professional services during the course of the financial year, must, at the time such sum is credited or at the time when such sum is paid in cash or by way of issuance of either a cheque, draft or any mode, whichever is earlier, deduct an amount that is equal to 5% as income-tax thereon.

Given that under this section, no such deduction will be done if such sum or the aggregate of sums (as may be the case) credited or paid to any resident during the course of a financial year does not go beyond fifty lakh rupees.

(2) The section 203A provisions do not apply to a person who is supposed to deduct tax as per the provisions of this section.

2. Sec 194N (new section): TDS on Cash Withdrawals surpassing Rs 1 crore from either banks or post office or cooperative bank (It is applicable w.e.f. 01/09/2019)

Insertion of the New Section:

Every person, who is,

(i) a banking company on whom the Banking Regulation Act, 1949 is applicable (this includes any banking institution or a bank as referred to in section 51 of that IT Act);

(ii) a co-operative society that is involved in carrying on the banking business; or

(iii) a post office, that is accountable to pay any sum, or, aggregate of sums (as per the case), in cash, which is more than one crore rupees in the previous year, to any individual (referred to as recipient hereafter) from either a single account or more accounts that the recipient has maintained with it ,must, at the time of making payment of such a sum, deducts an amount that equals two per cent as income tax, of the sum surpassing one crore rupees:

Given that nothing included in this sub-section will be applicable to any payment that is made to,

(i) the Government;

(ii) any co-operative society or banking company which is involved in carrying out the business of a post-office or banking;

(iii) any business correspondent of either a co-operative society or banking company that is involved in conducting the business of banking, as per the guidelines issued by the Reserve Bank of India under the Reserve Bank of India Act, 1934;

(iv) any white label automated teller machine operator of a co-operative society or banking company that is engaged in the business of banking, as per the authorisation which is issued by the Reserve Bank of India under the Payment and Settlement Systems Act, 2007;

(v) any other individual or class of persons, specified by the Central Government by way of notification in the Official Gazette and as per consultation with the Reserve Bank of India.