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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.
Which Section 194Q or 206C(1H) will be applicable

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!!
Stay Home- Stay Safe :)

This article is for guidance only, not to be substituted for detailed research or the exercise of professional judgment.


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Category Income Tax, Other Articles by - CA Pooja Dhoot 



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