Does Consolidating TDS Entries Risk Tax Scrutiny?

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Businesses sometimes consolidate multiple purchases from a single seller into one TDS entry for simplicity. While this streamlines reporting, there's a concern it could trigger tax scrutiny, potentially leading to queries about the source of funds. Although individual entries show the flow of revenue, a single large consolidated entry might appear unusual to the tax department. However, such queries are rare and typically resolvable with supporting statements.

Sahil Nagpal

Sahil Nagpal (Querist)

08 July 2025 When filing TDS returns under Section 194Q, some businesses combine multiple purchases from a single seller into one entry for simplicity. For example, a car showroom might consolidate monthly purchases from a supplier like Hyundai, totaling ₹10 crore, into a single transaction.

The Concern: While this streamlines reporting, could it trigger questions from the tax department about the source of funds? Individual entries clearly show the rotational nature of funds (sales revenue funding new purchases), but a single large entry might raise red flags about the origin of the ₹10 crore.