TDS on purchase of goods Section 194Q

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This discussion clarifies the threshold for TDS under Section 194Q on the purchase of goods. The key point is whether the ₹50 lakh limit includes GST. According to Circular 13/2021, if GST is separately indicated in the invoice, TDS is deducted on the amount excluding GST. However, if TDS is deducted on a payment basis and GST isn't clearly identified, the entire amount including GST may be subject to TDS.

Binil m

Binil m (Querist)

06 December 2022 "Under Section 194Q the rate of TDS is 0.1% if the Value of Purchase >50 Lakh."
On the VALUE OF PURCHASE mentioned, the amount of 50 Lakh including GST or Excluding GST is taken for threshold Limit??

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CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

06 December 2022 TDS applicable on payment made in excess of 50 lacs which includes GST

Binil m

Binil m (Querist)

06 December 2022 Then after the limit the taxable amount is calculated on exclusive gst value. Right Sir Thank You

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)

07 December 2022 Quote 'Circular 132021'.

4.3.2 Accordingly with respect to TDS under section 194Q of the Act, it is clarified that when tax is deducted at the time of credit of amount in the account of seller and in terms of the agreement or contract between the buyer and the seller, the component of GST comprised in the amount payable to the seller is indicated separately, tax shall be deducted under section 194Q of the Act on the amount credited without including such GST. However, if the tax is deducted on payment basis because the payment is earlier than the credit, the tax would be deducted on the whole amount as it is not possible to identity that payment with GST component of the amount to be invoiced in future.

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