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LAKSHMI KANTH (TAX CONSULTANT)     28 July 2021

194Q Vs.Purchase returns

194Q Vs purchase returns- clarification request
Dear Sir, with regard to Income Tax Circular vide no. 13 of 2021 dated 30th,June,2021, vide para 4.3.3: this para covers only two scenarios (1) purchase returns against which amount got refunded from the sellor and (2) replacement of goods against such purchase returns.

But 3rd scenario (which is not covered in the Circular I believe) is that as a purchaser I have a 60 days credit, hence, I make payment after 60 days. Therefore, I knew very well that the purchase returns made in month one, hence I am going to pay the amount after deducting the purchase returns, so Can I deduct TDS on net purchases ie.  the purchase returns from the purchase of month one? Or Do I have to deduct TDS on the entire purchase amount.


 2 Replies

CMA Poornima Madhava

CMA Poornima Madhava (CMA)     29 July 2021

Since Tax u/s 194Q to be deducted at source at the time of credit or payment whichever is earlier, you are required to deduct tax against the value as per invoice. If purchase return is recorded subsequently, excess deduction to this extent can be adjusted against future purchase from the same seller.

LAKSHMI KANTH

LAKSHMI KANTH (TAX CONSULTANT)     31 July 2021

Thank you so much

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