The Union Budget 2019 has introduced a provision for tax deduction at source (TDS) on payments made by individuals and Hindu Undivided Family (HUF). The TDS would cover payments made for personal or business purposes. The amounts include by way of commission or brokerage or fees for professional services.
Individuals and HUF making payments above Rs 50 lakh of the nature mentioned above are liable to deduct TDS. The TDS is applicable for payments made after 1 September 2019.
The Central Board of Direct Taxes (CBDT) has notified a challan-cum-statement in Form no. 26QD for facilitating the payment and filing of TDS return. The CBDT has also notified the TDS certificate in Form No. 16D.
The deductor should remit TDS within 30 days from the end of the month of deduction. The TDS certificate has to be issued to the contractor or professional within 15 days from the due date of furnishing Form No. 26QD.
The rate of TDS is 5% of the amount paid or credited. The TDS applies only to payments made to residents, and only if the aggregate payments exceed Rs 50 lakh in a financial year.
For example, in a case where Mr Anoop pays Rs 70 lakh to an interior decorator for on 15 October 2019, the TDS liability would be Rs 3.5 lakh. The TDS has to be deposited by 30 November 2019. The TDS certificate in Form No. 16D should be issued by 15 December 2019.
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I am a Chartered Accountant by profession. I specialise in personal taxes and corporate income tax matters. I am an avid reader and track developments in financial markets, economy and other market developments.