Difference sec 194q vs sec 206(c)

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This discussion clarifies the distinction between Section 194Q and Section 206C(1H) of the Income Tax Act, focusing on who is liable for tax deduction or collection. Section 194Q applies to the purchaser of goods when their turnover exceeds Rs. 10 crore, requiring TDS on payments exceeding Rs. 50 lakh. Conversely, Section 206C(1H) is for the seller of goods, mandating TCS on receipts if their turnover also exceeds Rs. 10 crore, with similar thresholds for applicability.

Kollipara Sundaraiah

Kollipara Sundaraiah (Querist)
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05 June 2021 Sir,
Confused What is the difference between sec 194q and sec 206(c) in it act and applicable assess in it act.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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06 June 2021 Applicability of section 194Q with Examples:
Seller’s Turover : Rs. 9 Crores

Buyer’s Turover : Rs. 15 Crores

Receipt or Payment for sale or purchase of Goods in previous year : Rs. 55 lakhs

Taxability:

Buyer’s Turnover is more than Rs. 10 Crores

Taxable amount : Rs. 5 lakhs ( Rs. 55 lakhs-Rs.50 lakhs)

TDS u/s194Q : 0.1% on Rs. 5* lakhs

TCS u/s 206C(1H): not applicable as Seller’s turnover is less than 10 Crores.

Seller’s Turover : Rs. 15 Crores

Buyer’s Turover : Rs. 9 Crores

Receipt or Payment for sale or purchase of Goods in previous year : Rs. 55 lakhs

Taxability:

Buyer’s Turnover is less than Rs. 10 Crores

Seller’s Turover is more than Rs. 10 Crores

Taxable amount : Rs. 5 lakhs ( Rs. 55 lakhs-Rs.50 lakhs)

TDS u/s194Q : Not applicable

TCS u/s 206C(1H): 0.1% on Rs. 5 lakhs**.

Seller’s Turover : Rs. 15 Crores

Buyer’s Turover : Rs. 15 Crores

Receipt or Payment for sale or purchase of Goods in previous year : Rs. 55 lakhs

Taxability:

Buyer’s Turnover is more than Rs. 10 Crores

Seller’s Turover is more than Rs. 10 Crores

Taxable amount : Rs. 5 lakhs ( Rs. 55 lakhs-Rs.50 lakhs)

TDS u/s194Q : 0.1% on Rs. 5 lakhs*

TCS u/s 206C(1H): Not applicable (see exception).

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