CAJayprakash Pandey
Quick Summary
W.E.F. 1ST JULY, 2021: STRINGENT PROVISIONS UNDER THE INCOME TAX ACT, 1961 The Finance Act, 2021 introduced following stringent provisions under Income Tax Act, applicable from 1st of July, 2021. TDS ON PURCHASE OF GOODS [SECTION 194Q] (We can check out difference between corresponding sect
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FAQ :
The main stringent provision introduced is Section 194Q, which mandates Tax Deducted at Source (TDS) on the purchase of goods.
The buyer is responsible for deducting TDS under Section 194Q, provided their turnover exceeded ₹10 crore in the immediately preceding financial year.
TDS is to be deducted if the aggregate value of purchases of goods from a resident seller exceeds ₹50 lakh in a financial year.
The TDS rate is 0.1% on the sum exceeding ₹50 lakh, provided the seller's PAN is available. If the PAN is not available, the rate is 5% as per Section 206AA.
If a buyer fails to deduct and deposit the TDS, 30% of the purchase expenditure will be disallowed under Section 40a(ia) of the Income Tax Act.
Section 194Q is about TDS on purchase of goods by the buyer, while Section 206C(1H) is about Tax Collected at Source (TCS) on the sale of goods by the seller. If both sections are applicable to a transaction, Section 194Q prevails, meaning the buyer deducts TDS.
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