TDS u/s 194Q in case of Section 8 company registered u/s 12A and 80G
This query is : Resolved
21 April 2025
Hi
A charitable company X invested in shared of a for profit company Y from it's reserve funds. X wants to sell the share to a buyer Z at a higher agreed valuation. Z is proposing to invoke provisions of section 194Q and withholding u/s @0.1% on the purchase consideration. Questions -
1. Is the section 8 company as above exempt from provisions of TDS u/s 194Q?
2. If yes, is there a notification released by the Income Tax Department?
Thank you.
Rajesh
A charitable company X invested in shared of a for profit company Y from it's reserve funds. X wants to sell the share to a buyer Z at a higher agreed valuation. Z is proposing to invoke provisions of section 194Q and withholding u/s @0.1% on the purchase consideration. Questions -
1. Is the section 8 company as above exempt from provisions of TDS u/s 194Q?
2. If yes, is there a notification released by the Income Tax Department?
Thank you.
Rajesh
21 April 2025
Hi
Section 194Q is applicable only in the case of the purchase of goods where the turnover of the buyer exceeds ₹10 crore in the preceding financial year. In the specific case you mentioned, X is a charitable company that has invested in the shares of Company Y (a profit-making company). Since shares are not classified as goods, the liability to deduct TDS under Section 194Q does not arise.
Therefore, even though there is no specific exemption granted to any company under Section 194Q, the provision is not applicable your case.
Section 194Q is applicable only in the case of the purchase of goods where the turnover of the buyer exceeds ₹10 crore in the preceding financial year. In the specific case you mentioned, X is a charitable company that has invested in the shares of Company Y (a profit-making company). Since shares are not classified as goods, the liability to deduct TDS under Section 194Q does not arise.
Therefore, even though there is no specific exemption granted to any company under Section 194Q, the provision is not applicable your case.
21 April 2025
Thank you. can you also refer to the notification https://incometaxindia.gov.in/communications/circular/circular_13_2021.pdf and confirm whether the exemption still applies in case the shares are not listed on stock exchange?
21 April 2025
yes whether the shares are listed or not, it will not come under the defnition of goods to deduct the tds under Section 194Q
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