What is TDS U/s 194k | All about TDS u/s 194K

After section 194J of the Income-tax Act, the following section shall be inserted, namely:–

‘194K. Any person responsible for paying to a resident any income in respect of––

(a) units of a Mutual Fund specified under clause (23D) of section 10; or
(b) units from the Administrator of the specified undertaking; or
(c) units from the specified company,

shall, at the time of credit of such income to the account of the payee or at the time of
payment thereof by any mode, whichever is earlier, deduct income-tax thereon at the
rate of ten per cent.:

Provided that the provisions of this section shall not apply where the amount of
such income or, as the case may be, the aggregate of the amounts of such income
credited or paid or likely to be credited or paid during the financial year by the person
responsible for making the payment to the account of, or to, the payee does not
exceed five thousand rupees.

Explanation 1.—For the purposes of this section,—

(a ) “Administrator” means the Administrator as referred to in clause (a) of
section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002;

(b) “specified company” means a company as referred to in clause (h) of
section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002;

(c) “specified undertaking” shall have the meaning assigned to it in clause (i) of
section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002.


Explanation 2.––For the removal of doubts, it is hereby clarified that where any
income referred to in this section is credited to any account, whether called
“suspense account” or by any other name, in the books of account of the person
liable to pay such income, such crediting shall be deemed to be the credit of such
income to the account of the payee and the provisions of this section shall apply
accordingly.’.

Conclusion

As per Section 194K, any person responsible for paying an income to a resident with respect to:

1. Units of a Mutual Fund as per Section 10(23D)

2. Units from the Administrator

3. Units from a specified company

at the time of credit of such income to the payee’s account exceeding Rs 5000 or at the time of making payment, whichever is earlier, shall deduct TDS @10%.


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