Mr. Madhav, an individual carrying on retail business with turnover of 3.2 crores in the P.Y.2024-25. He made contract payment for repair of…
CA Final · Direct Tax Laws and International Taxation · MTP · May 2026
Mr. Madhav, an individual carrying on retail business with turnover of 3.2 crores in the P.Y.2024-25. He made contract payment for repair of residential house of 3 lakhs and - 75,000 towards commission on 01.08.2025 to Mr. Vayu for business purposes. Examine whether TDS provisions would be attracted, if yes, specify the rate and amount of TDS applicable.
Suggested Answer and Working Notes:
TDS under section 194C is not attracted since the payment of 3lakhs for repair of residential house is for personal purpose. TDS under section 194M is also not attracted as aggregate of contract payment to the payee in the P.Y.2025-26 does not exceed 50lakhs. However, on payment of 75,000 towards commission to Mr. Madhav for business purposes, tax is required to be deducted at source u/s 194H @2%, since the payment exceeds - 20,000, and Mr. Madhav's turnover from business exceeds 1crore in the P.Y.2024-25. Accordingly, amount of 1,500 (₹ 75,000 x 2%) is required to be deducted at source.
Topics: Deduction, Collection and Recovery of Tax
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