## Section 194M — TDS on Certain Payments by Individuals/HUF

### When Does 194M Apply?

Case 1: Payer is a Non-HIJACR Assessee (i.e., not liable to tax audit), AND

Case 2: Payer IS HIJACR, BUT payment is being made for PERSONAL purposes (under what would otherwise be 194C or 194J Professional Services)

→ In both cases, aggregate amount paid in the PY must exceed ₹50 Lakhs.

### Threshold — Payee-Wise

→ The ₹50 Lakh limit is checked payee-wise (separately for each payee).

### Coverage

194M covers:

Works contract (covered by 194C, but for personal use)
Commission/brokerage
Professional fees (covered by 194J FPS, but for personal use)

### Logic

Section 194M plugs a loophole — without it, individuals making large personal payments to contractors/professionals would escape TDS entirely.

Worked example

### Example 1

Example 1: Mr. X (a salaried employee with no business) constructs his house and pays a contractor ₹75 Lakhs during PY.

Analysis:

Mr. X is Non-HIJACR
Aggregate to single payee > ₹50 Lakhs

→ TDS u/s 194M applicable at 2%.

Example 2: Mrs. Y (turnover ₹5 Crore, HIJACR) pays an interior designer ₹60 Lakhs for decorating her personal residence (not business).

Analysis: Although she is HIJACR, payment is for personal purposes → 194M applies.

Example 3: Mr. Z pays ₹30 Lakhs to Contractor A and ₹35 Lakhs to Contractor B (both personal).

Analysis: ₹50 Lakh limit is payee-wise → Neither exceeds individually → No TDS u/s 194M.

⚠️ Common exam mistakes

Aggregating payments to multiple payees to check the ₹50 Lakh limit — it is checked separately for each payee.
Assuming 194M doesn't apply if the payer is HIJACR — it does apply if the payment is for personal purposes.
Confusing 194M (special TDS for personal payments) with 194C/194J (regular business TDS).
Applying 194M to all professional fees — only FPS is covered, not technical services.

Bare-Act text Section 194M · Income-tax Act, 1961 · click to expand

194M is applicable when aggregate amt paid > 50 lakhs. 50 lakhs limit is checked payee wise. 194M applies when Payer is Non-HIJACR Assessee. 194M also applies where Assessee is HIJACR, but Payment is done by payer for Personal Purposes u/s 194C and 194J(FPS) if Amt > 50 Lakhs.

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Section 194M - TDS by Non-HIJACR / for Personal Payments

Worked example

⚠️ Common exam mistakes