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TDS u/s 194Q, which was introduced via Finance 2021 has a stark similarity to Section 206C (1H) which was introduced in Finance Act 2020. As per Section 194Q, TDS will be deducted if purchase from a single buyer exceeds Rs. 50 lakh during the current year (Only on amount exceeding 50 lakh). On the other hand, as per Section 206C(1H) TCS will be collected if the sale to a single customer exceeds Rs. 50 lakh during the Current Year (Only on amount exceeding 50 lakh). Let us understand the difference between the two.

TDS and TCS on purchase and sale of goods

Basis

TDS u/s 194Q

TCS u/s 206C(1H)

W.e.f

01-July-2021

01-Oct-2020

On whom

Person having turnover more than 10 crore in Previous Financial Year

Person having turnover more than 10 crore in Previous Financial Year

Transaction

On Purchase

On Sale

From whom

TDS will be deducted only if Purchase from single buyer exceeds Rs. 50 lakh during the current year (Only on amount exceeding 50 lakh)

TCS will be Collected only if sale to single Customer exceeds Rs. 50 lakh during current year (Only on amount exceeding 50 lakh)

Rate

0.1%

0.1%

Time

At the time of credit in books or payment whichever is earlier

At the time of receipt

Time limit to deposit

7th of the next month

7th of the next month

Important

Please note

From 01 July, If your customer starts deducting your TDS u/s 194Q, then TCS is not to be collected.

Eg.

  1. If you and your customer both have turnover exceeding Rs. 10 crore in previous Financial Year, then you ought to have been collecting TCS on sales during the period Apr 21 - Jun 21. But, now from 01 July your customer will be liable to deduct TDS on your bill and you will not collect TCS.
  2. If you have turnover exceeding Rs. 10 crore in previous Financial Year and your customer has less than 10 crore, then you ought to have been collecting TCS on sales during the period Apr 21 - Jun 21. In this case, since your customer is not liable to deduct TDS on payment, so you will have to continue collecting TCS.
  3. If your sales are less than Rs. 10 crore in previous Financial Year, then none of the above section is applicable on you.
 
 

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Category Income Tax, Other Articles by - CA. Arpan Jain 



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