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Section 194M: TDS by Individual or HUF on Certain Payments

Section 194M of the Income-tax Act, 1961 required specified individuals and Hindu undivided families to deduct tax on high-value payments to resident contractors, commission or brokerage recipients and professionals. From 1 April 2026, the corresponding TDS obligation is contained in Section 393(1), Table Sl. No. 6(ii) of the Income Tax Act, 2025.

Current position from 1 April 2026: Payments by an individual or HUF falling within this category are reported under Section 393(1), Table Sl. No. 6(ii). The Income Tax Department has introduced Form 141, Schedule C, as the unified challan-cum-statement for TDS on payments by an individual or HUF to contractors or professionals.

Section 194M at a glance

Point	Rule
Payer	Individual or HUF not otherwise required to deduct tax on the covered payment under Sections 194C, 194H or 194J of the 1961 Act
Payee	Resident
Covered payments	Contract work including supply of labour, commission other than insurance commission, brokerage, and fees for professional services
Threshold	No deduction where the covered sum or aggregate of covered sums to the resident during the financial year does not exceed Rs. 50 lakh
Time of deduction	Earlier of credit or payment
TAN under old Section 194M	Section 203A did not apply to a person deducting tax under Section 194M
Current reference	Section 393(1), Table Sl. No. 6(ii), Income Tax Act, 2025

Who was required to deduct TDS under Section 194M?

Section 194M applied to an individual or HUF who was not required to deduct income-tax under Section 194C, Section 194H or Section 194J for the relevant payment. It therefore extended TDS compliance to specified high-value payments that could otherwise fall outside those regular business or professional TDS provisions.

Payments covered by Section 194M

The provision covered a sum paid to a resident for carrying out work, including supply of labour for carrying out work, under a contract; commission other than insurance commission covered by Section 194D; brokerage; or fees for professional services.

Meaning of contract

For Section 194M, "contract" took its meaning from the Explanation to Section 194C. The definition operated together with the statutory meaning of "work" used for contractor payments.

Meaning of commission or brokerage

"Commission or brokerage" took its meaning from the Explanation to Section 194H. Section 194M expressly excluded insurance commission referred to in Section 194D from this expression.

Meaning of professional services

"Professional services" took its meaning from the Explanation to Section 194J and covered services of the kinds specified by that provision.

Meaning of work

"Work" took its meaning from the Explanation to Section 194C. Section 194M also expressly referred to supply of labour for carrying out work.

Rs. 50 lakh threshold

Under Section 194M, no deduction was required if the sum or aggregate of covered sums credited or paid to a resident during the financial year did not exceed Rs. 50 lakh. The aggregate payment to the particular resident during the relevant year therefore had to be considered for determining whether the provision applied.

When was tax deducted?

The deduction point was the earlier of credit of the covered sum to the resident or actual payment by cash, cheque, draft or any other mode. The date of the earlier event is also important for determining whether the 1961 Act or the 2025 Act governs a transaction spanning the 31 March 2026 transition.

Income Tax Act, 2025: rule from 1 April 2026

The Income Tax Act, 2025 consolidates non-salary TDS provisions under Section 393. The corresponding category for payments by an individual or HUF to contractors or professionals is Section 393(1), Table Sl. No. 6(ii). The Income Tax Department states that the new Act largely retains the rates and thresholds of the earlier TDS regime while reorganising the provisions into tables.

Transition rule: Where the earlier of credit or payment occurred on or before 31 March 2026, the Income-tax Act, 1961 applies. Where that earlier event occurs on or after 1 April 2026, the Income Tax Act, 2025 applies. For current transactions, the relevant Section 393 table item should be quoted instead of old Section 194M.

Form 141 for current transactions

From Tax Year 2026-27, Form 141 is the unified challan-cum-statement for specified PAN-based TDS transactions under Section 393(1). Schedule C of Form 141 is specifically used for TDS on payments made by an individual or HUF to contractors or professionals under Section 393(1), Table Sl. No. 6(ii). It replaces the earlier Form 26QD route for current transactions governed by the 2025 Act.

The Income Tax Department's Form 141 utility provides payment categories for contract, commission or brokerage, and professional service or work. The form is filed through the e-Filing portal under the Income Tax Act, 2025.

Practical compliance checklist

Confirm that the payee is a resident and the payment falls within the covered category.
Aggregate covered payments to the payee for the relevant year and test the statutory threshold.
Determine the earlier date of credit or payment to identify the governing Act.
For a current transaction from 1 April 2026, use Section 393(1), Table Sl. No. 6(ii), rather than old Section 194M.
Use the prescribed challan-cum-statement procedure, including Form 141 Schedule C where applicable.
Check PAN and other statutory requirements before deduction and filing.

Official references

This article is a general guide. The applicable TDS rate, threshold, timing, PAN requirements, certificate provisions and filing procedure should be checked under the law and rules applicable to the particular transaction and tax year.