KEY TDS PROVISIONS: SECTIONS 194IA, 194IB, 194M & 194S

Compliance Requirements

• Form to be filed: Form 26QB

• TAN: Not required

• TDS certificate: Form 16B

PAN Requirement

• PAN of the seller is mandatory.

• If PAN is not furnished, TDS shall be deducted at 20% as per Section 206AA.

Note

• TDS must be deducted on each installment of payment.

• Proper filing ensures the seller receives correct TDS credit, which is essential when filing their income tax return.

4.SECTION 194IB – TDS ON RENT PAID BY INDIVIDUAL / HUF

Applicability

• Applicable when rent paid for land or building exceeds ₹50,000 per month.

• Tenant must be an individual or HUF not liable to tax audit.

Rate and Threshold (Official)

• TDS rate: 2%

• Threshold: Rent exceeding ₹50,000 per month

• Time of Deduction

• TDS is deducted once in a financial year, generally in March or at the time of vacating the property.

Compliance Requirements

• Form to be filed: Form 26QC

• TAN: Not required

• TDS certificate: Form 16C

PAN Requirement

• PAN of the landlord is mandatory.

• If PAN is not furnished, TDS shall be deducted at 20%, subject to statutory restrictions.

Note

• Section 194IB simplifies TDS compliance for tenants who are not subject to audit.

• Helps landlords claim TDS credit easily in their tax filings.

5.SECTION 194M – TDS ON PAYMENTS TO CONTRACTORS AND PROFESSIONALS

Applicability

Applicable when an individual or HUF (not liable to tax audit) makes payments to:

• Contractors or subcontractors

• Professionals

• Commission or brokerage agents

The aggregate payment exceeds ₹50 lakh in a financial year.

Rate and Threshold (Official)

• TDS rate: 2%

• Threshold: ₹50,00,000 in a financial year

• Time of Deduction

• TDS is deducted at the time of payment or credit, whichever is earlier.

Compliance Requirements

• Form to be filed: Form 26QD

• TAN: Not required

• TDS certificate: Form 16D

PAN Requirement

• PAN of the payee is mandatory.

• If PAN is not furnished, TDS shall be deducted at 20% under Section 206AA.

Note:

• Section 194M ensures high-value payments to professionals and contractors are subject to tax collection at source.

• Timely deduction and filing prevents interest and penalties for the payer.

6.SECTION 194S – TDS ON TRANSFER OF VIRTUAL DIGITAL ASSETS (VDAS)

Applicability

• Applicable when any person makes payment to a resident for the transfer of a virtual digital asset, such as cryptocurrency or NFTs.

• TDS obligation applies to both cash and non-cash consideration.

Rate and Threshold

TDS rate: 1% of consideration

Thresholds:

• Specified persons: ₹50,000 per financial year

• Other persons: ₹10,000 per financial year

• Time of Deduction

• At the time of payment or credit, whichever is earlier

Compliance Requirements

• Form 26QE: Challan-cum-statement

• Form 16E: TDS certificate

• TAN: Not required

PAN Requirement

• PAN of the payee is mandatory

• If PAN is not furnished, TDS is deductible at 20%

Notes

• TDS applies on the gross consideration, not on gains

• Asset cannot be transferred unless TDS is deducted and deposited

7.CONSEQUENCES OF NON-COMPLIANCE

Interest:

• 1% per month for delay in deduction

• 1.5% per month for delay in payment

Late fee (Section 234E): ₹200 per day (limited to TDS amount)

Penalty (Section 271H): ₹10,000 to ₹1,00,000

8.CONCLUSION

Sections 194IA, 194IB, 194M and 194S impose significant TDS compliance obligations on Individuals and HUFs for specified transactions, even where tax audit is not applicable. The simplified mechanism of challan-cum-statement filing, coupled with the absence of a TAN requirement, places greater emphasis on timely deduction, deposit and reporting within the prescribed timelines.

As highlighted by TaxoSmart, accurate application of applicable thresholds, rates, PAN requirements and prescribed forms is essential to ensure seamless TDS credit to payees and to safeguard deductors from interest, late fees and penal consequences under the Income-tax Act, 1961.

DISCLAIMER

The information contained in this document is prepared by R.J. Soni & Associates and TaxOSmart LLP (hereinafter referred to as RJSA) for information purpose only. It does not constitute any legal advice or tax advice. In no way, this document should be treated as a marketing material or efforts to solicit a client. While we have made every attempt to ensure that the information contained in this document is true, RJSA, its partners and/or any of its employees make no claims / guarantee about its accuracy, completeness, or up-to-date character, or warranty, express or implied, including the warranty of opinions expressed for a particular purpose, or assume any liability or responsibility for the accuracy, completeness, or usefulness of any information available from this document.