Hi,

TDS on Payment to consultant is covered in section 194J of the Income Tax Act.

Let’s discuss the second part of this question i.e who is required to deduct TDS

As per section 194 J, Every person (Service Recipient) needs to deduct TDS on consultancy charges, except Individual and HUF:

• In case of an individual or HUF carrying on a business: Where his turnover does not exceed Rs. 1 crore during the previous financial year.
• In case of an individual or HUF carrying on the profession: Where his turnover does not exceed Rs. 50 lakh during the previous financial year.

Now let’s see the first part of the question i.e what happens if TDS is not deducted.

Following consequences need to face to the service recipient.

1. Disallowance of 30% Expenditure in the year in which it is claimed.
2. Interest @1.% per month/part of the month from the date on which TDS was required to be deducted up to the date of actual deduction.

Thanks!