TDS mandatory for payments exceeding Rs 50 lakh to contractors, professionals

New Delhi: To widen the tax net, the government proposed to introduce 5 per cent TDS on all payments made by individuals to contractors or professionals in excess of Rs 50 lakh a year.

To make it easy for them, the government said the tax deduction at source (TDS) could be deposited in the treasury using his or her permanent account number (PAN) only. Finance Minister Nirmala Sitharaman also proposed in the Budget 2019-20 that filing of income tax return will be mandatory for people depositing more than Rs 1 crore in current account, spending over Rs 1 lakh towards electricity bill payment and Rs 2 lakh on foreign travel in a year.

Currently, there is no requirement for an individual or Hindu Undivided Family (HUF) to deduct tax at source on payments made to a resident contractor or professional when it is for personal use, or if the individual or HUF is not subjected to audit for his business or profession.

"It is proposed to insert a new provision making it obligatory for such individual or HUF to deduct tax at source at the rate of five per cent if the annual payment made to a contractor or professional exceeds Rs 50 lakh," said the Budget document.