Section 194M - TDS by Individuals/HUF on Contractor/Commission/Professional Payments
# Section 194M - TDS by Certain Individuals/HUF
## Purpose
Covers Individual / HUF payers who are NOT covered under sections 194C, 194H, or 194J (i.e., small individuals/HUFs with turnover below threshold or making personal payments).
## Who Deducts
Individual or HUF other than those required to deduct TDS u/s 194C, 194H or 194J.
## On What
Payments to:
Resident contractors (works contract), OR
Commission or brokerage, OR
Fees for Professional Services (FPS).
## Payee
Any resident.
## Threshold
Amount or aggregate > ₹ 50,00,000 in a F.Y.
## Rate of TDS
2%
## When to Deduct
At the time of credit OR payment, whichever is earlier.
## Important
No TAN required — uses Form 26QD.
Aimed at high-value personal payments (e.g., construction of own house above ₹ 50 lakhs, big-ticket professional services).
Worked example
### Example 1
Example: Mr. R (salaried, no business) pays a contractor ₹ 70,00,000 in F.Y. for construction of his house.
Solution: Mr. R is not covered by 194C (no business). Payment > ₹ 50 lakhs → 194M applies.
TDS = 2% × ₹ 70,00,000 = ₹ 1,40,000.
### Example 2
Example: Mr. T (small businessman, T/O ₹ 70 lakhs) pays ₹ 60 lakhs professional fees to a consultant.
Solution: Mr. T is below 194J threshold. 194M applies → TDS @ 2% = ₹ 1,20,000.
⚠️ Common exam mistakes
Applying 1% (the 194C rate) instead of 2% under 194M
Forgetting that 194M applies only above ₹ 50 lakhs threshold
Obtaining TAN — not required, use Form 26QD
Bare-Act text Section 194M · Income-tax Act, 1961 · click to expand
Any person, being an individual or a Hindu undivided family (other than those who are required to deduct income-tax as per the provisions of section 194C, section 194H or section 194J) responsible for paying any sum to any resident for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract, or by way of commission (not being insurance commission referred to in section 194D) or brokerage or by way of fees for professional services during the financial year, shall, at the time of credit of such sum or at the time of payment of such sum, whichever is earlier, deduct an amount equal to two per cent of such sum as income-tax thereon. Provided that no such deduction shall be made if such sum or aggregate of such sums does not exceed fifty lakh rupees during the financial year.