CA Pooja Dhoot
Quick Summary
1. What is Section 194Q and 206C(1H)?
- Section 194Q is for Tax deducted at source (TDS) applicable from 01.07.2021 and
- Section 206C(1H) is for Tax Collected at source(TCS) applicable from 01.10.2020.
2. When is a person liable to deduct TDS u/s 194Q and TCS u/s 206C(1H)?
TDS is to be deducted under Section 194Q when the following conditions are satisfied-
- The person (who is a buyer) has turnover/gross receipts/Sales from business of above Rs.10 crore during the F.Y 2020-21.
- Such payment is to be done of the value/ aggregate of the value exceeding Rs.50 Lakhs to the seller in a financial year.
TCS shall be deducted under Section 206C(1H) when the following conditions are satisfied-
- The person (who is a seller) has turnover/gross receipts/Sales from business of above Rs.10 crore during the F.Y 2020-21.
- Receipts of the value/ aggregate of the value exceeding Rs.50 Lakhs to the seller in a financial year.
3. When will be the TDS deducted and at what Rate?
- TDS shall be deducted at the time of Payment or credit to the seller whichever is earlier.
- TDS shall be deducted on advance payment made.
- TDS shall be deducted at the rate of
- 1% on amount exceeding Rs.50 Lakhs.
- 5% on amount exceeding Rs.50 Lakhs, in case of non-availability of PAN.
4. When will be the TCS be collected and at what Rate?
- TCS shall be collected at the time of Receipt of sale proceeds.
- TCS shall be collected when advance is received.
- TDS shall be deducted at the rate of
- 1% on amount received exceeding Rs.50 Lakhs.
- 1% on amount exceeding Rs.50 Lakhs, in case of non-availability of PAN.
5. Which forms are required to be filed and what will be the periodicity?
- For TDS u/s 194Q- Form 26Q will be required to be filed quarterly.
- For TCS u/s 206C(1H)- Form 27EQ will be required to be filed quarterly.
6. Illustrations of applicability of TDS and TCS
|
Buyers Turnover above 10 crores |
Sellers Turnover above 10 crores |
Transaction Value above Rs.50 lakhs |
Section Applicable |
|
No |
Yes |
Yes |
TCS- 206C(1H) |
|
Yes |
No |
Yes |
TDS- 194Q |
|
Yes |
Yes |
Yes |
TDS- 194Q |
|
No |
No |
Yes |
Not Applicable |
|
Yes |
Yes |
No |
Not Applicable |
|
Yes |
Yes |
1. Amount received above 50 lakhs 2. Purchase of goods below 50 lakhs |
TCS- 206C(1H) |
Hope this article helps you. Happy reading!!
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This article is for guidance only, not to be substituted for detailed research or the exercise of professional judgment.
FAQ :
Section 194Q relates to Tax Deducted at Source (TDS) and is applicable from 01.07.2021, while Section 206C(1H) pertains to Tax Collected at Source (TCS) and has been applicable since 01.10.2020.
A buyer is liable to deduct TDS under Section 194Q if their business turnover/gross receipts/sales exceeded Rs. 10 crore in FY 2020-21, and they make a payment exceeding Rs. 50 lakhs to a seller in a financial year.
A seller is liable to collect TCS under Section 206C(1H) if their business turnover/gross receipts/sales exceeded Rs. 10 crore in FY 2020-21, and they receive payments exceeding Rs. 50 lakhs from a buyer in a financial year.
TDS is deducted at a rate of 1% on the amount exceeding Rs. 50 lakhs. If the seller's PAN is not available, the rate is 5% on the amount exceeding Rs. 50 lakhs.
TCS is collected at a rate of 1% on the amount received exceeding Rs. 50 lakhs. If the buyer's PAN is not available, the rate is 1% on the amount exceeding Rs. 50 lakhs.
For TDS under Section 194Q, Form 26Q must be filed quarterly. For TCS under Section 206C(1H), Form 27EQ must be filed quarterly.
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