Finance Act 2021 has introduced Section 194Q providing TDS on purchase of goods applicable w.e.f from 1st July 2021. Section 194Q is similar to Section 206C(1H) which was introduced by Finance Act 2020, requiring Seller to collect tax at source on transactions between a buyer and a seller. The below table covers a Comparative analysis of both the Sections of Income Tax Act, 1961 with illustrations simplifying the provisions.
|
Particulars |
Section 194Q (TDS) |
Section 206C(1H) (TCS) |
|
Effective Date |
1st July, 2021 |
1st October, 2020 |
|
Person responsible |
Buyer |
Seller |
|
Applicability/ Turnover Limit |
Turnover of Buyer > Rs 10 Cr in preceding Financial Year |
Turnover of Seller > Rs 10 Cr in preceding Financial Year |
|
Counter Party |
Resident Seller |
Resident Buyer |
|
TDS/TCS Rates |
0.1% on amount of Purchase of goods exceeding Rs. 50 Lakhs |
0.1% on amount of Sale consideration received exceeding Rs. 50 Lakhs |
|
5% (If PAN not available) |
1% (If PAN not available) |
|
|
Threshold Limit |
Threshold Limit of Rs. 50 lakhs shall be computed from 01-04-2021. |
Threshold of Rs. 50 lakhs shall be computed from 01-04-2020. |
|
Point of Taxation |
Payment or Credit whichever is earlier |
At the time of receipt |
|
TDS/TCS on Advance Payment/Receipts |
Yes |
Yes |
|
TDS/TCS Payment |
7th of Next Month |
7th of Next Month |
|
TDS/TCS Return Form |
26Q |
27EQ |
|
TDS/TCS Certificate |
Form - 16A |
Form - 27D |
|
Whether TCS u/s 206C (1H) or TDS u/s 194Q will apply? |
Both TDS u/s 194Q and TCS u/s 206C(1H) will not apply on the same Transaction. In case of potential overlap between the above provisions TDS u/s 194Q will apply and TCS u/s 206C(1H) will not apply. |
|
|
Sample Illustrations |
Examples |
TCS u/s 206C (1H) or TDS u/s 194Q |
|
Buyer's Turnover - 20 Cr, Seller's Turnover - 5 Cr & Transaction Value - 1 Cr |
TDS u/s 194Q |
|
|
Buyer's Turnover - 5 Cr, Seller's Turnover - 20 Cr & Transaction Value - 1 Cr |
TCS u/s 206C (1H) |
|
|
Buyer's Turnover - 20 Cr, Seller's Turnover - 20 Cr & Transaction Value - 1 Cr |
TDS u/s 194Q |
|
|
Buyer's Turnover - 5 Cr, Seller's Turnover - |
NA |
|
|
Buyer's Turnover - 20 Cr, Seller's Turnover - 20 Cr & Transaction Value - 25 Lakhs |
NA |
|
|
Non Applicability |
If TDS is applicable under any other provisions of the act. |
If TDS is applicable under any other provisions of the act. |
|
Transactions on which TCS is applicable under 206C other than 206C(1H). |
If buyer is - |
|
Disclaimer: The information contained in this document prepared is for information purpose only. Please consult your professional before making any decision or taking any action using information contained in this document.
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