194Q OR TCS

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King Raja (Querist)
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01 July 2021 X- is a supplier with turnover over Rs 10 Cr in previous year Y- is a buyer with with turnover over Rs 10Cr in previous year. Who is liable to deduct TDS Or TCS or two person want liable for that

Deepa B

Deepa B (Expert)
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01 July 2021 As both the provision applies on the same transaction it seems bit confusing. But on reading both the provision it seems that that primary obligation is of the buyer to deduct TDS u/s 194Q. Because one of the exception/proviso to section 206C(1H) says that if buyer has already deducted TDS under any other applicable provision then TCS under said section need not be done.
But in case the buyer defaults in deduction of TDS then the liability of seller is triggered for collection of TCS.

CA Altamush Zafar

CA Altamush Zafar (Expert)
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01 July 2021 Primary liability of y to deduct tds.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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01 July 2021 194Q TDS applicable here.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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01 July 2021 @ Deepa B
y is LIABLE to deduct and if made DEFAULT to deduct TCS applies to x

@ Querist

y to deduct

x need not collect.

Deepa B

Deepa B (Expert)
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01 July 2021 Please refer to the below extract from clarification issued by CBDT vide circular 13/2021 dated 30.6.2021 which says that for any reason if buyer failed to deduct TDS u/s 194Q then seller can collect tax u/s 206C(1H):
If a transaction is both within the purview of section 194-Q of the Act as well as sub-section (I H) of section 206C of the Act, the tax is required to be deducted under section 194-Q of the Act. The transaction shall come out of the purview of sub-section (1 H) of section 206C of the Act after tax has been deducted by the buyer on that transaction. Once the buyer has deducted the tax on a transaction, the seller is not required to collect the tax under sub-section (I H) of section 206C of the Act on the same transaction. However, if, for any reason, tax has been collected by the seller under sub-section (I H) of section 206C of the Act, before the buyer could deduct tax under section 194-Q of the Act on the same transaction, such transaction would not be subjected to tax deduction again by the buyer. This concession is provided to remove difficulty, since tax rate of deduction and collection are same in section 194Q and sub-section (IH) of section 206C of the Act

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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02 July 2021 @ Deepa B
Than you for the citation. Even otherwise, if the deductor defaults, the collector can enforce 206C(1H) vide corollary to 194Q(5).

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