TDS on purchase of goods under Section 194Q (w.e.f 01.07.2021)
Abstract of the section is as follows
Any person, being a buyer who is responsible for paying any sum to any resident (hereafter in this section referred to as the seller) for purchase of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, shall, at the time of credit of such sum to the account of the seller or at the time of payment thereof by any mode, whichever is earlier, deduct an amount equal to 0.1 % of such sum exceeding Rs.50L as income-tax.
Analysis
Applicability
- To the buyer whose Gross sales/ Receipts/ Turnover in the preceding financial year exceed Rs.10 Cr and
- Aggregate amount of Purchases from such particular buyer in the financial year exceeds Rs.50L
Non Applicability
The Provisions of this newly inserted section is not applicable when:
- The transaction on which tax is deductible under any provisions of the Act
- The transaction covered by TCS under 206C.
(However, it is applicable to the transaction covered under 206C (1H) TCS on sale of goods)
If the transaction on which TCS is required to be collected under Section 206C (1H) and TDS is required to be deducted under Section 194Q, then the provisions of Section 194Q will prevail.
Rate of TDS
| Rate | |
| Seller having PAN | 0.1% |
| Seller not having PAN | 5% |
Illustration
| Seller's Turnover of last year(In Cr) | Buyer's Turnover of last year(In Cr) | Receipt(sale)/Payment(purchase) in the current year(In Lakhs) | Amount for TDS/TCS(In Lakhs) |
TDS |
TCS |
|
9 |
9 |
57 |
7 |
NA as the turnover is less than 10 Cr | NA as the turnover is less than 10 Cr |
|
11 |
9 |
57 |
7 |
NA as the turnover is less than 10 Cr | Applicable@0.1% on 7L under 206C(1H) |
|
9 |
11 |
57 |
7 |
Applicable@0.1% on 7L under 194Q | NA as the turnover is less than 10 Cr |
|
11 |
11 |
57 |
7 |
Applicable@0.1% on 7L under 194Q | Not applicable because if the transaction is covered under TDS provisions then TCS need not be collected. |
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