Regarding Applicability of IT TDS

Hi Sunil! Here’s a quick clarity on IT-TDS applicability for your scenario:

Applicability of Income Tax TDS on payment for supply and delivery of goods

1. Nature of payment:
   Payment for supply and delivery of goods (like DI pipes) is generally considered a contract for sale of goods.

2. Section 194Q (TDS on purchase of goods) applies when:

   • Buyer’s turnover exceeds ₹10 crore in the preceding FY

   • Payment to a resident seller exceeds ₹50 lakh in a FY

   • TDS @ 0.1% is deducted on the amount exceeding ₹50 lakh

3. Is IT-TDS applicable here?

   • If the payment is purely for goods supply, then Section 194Q applies.

   • But if it is a contract for work or supply of goods with services (like installation, fabrication), then TDS under Section 194C (contractor) might apply.

4. For Development Authority (government or local authority):

   • They are required to deduct TDS as per the relevant provisions if thresholds are met.

5. If payment is only for supply of DI pipes (goods), and limits are met:

   • Deduct TDS under Section 194Q on purchase of goods.

6. If payment includes supply + services (contract work):

   • Deduct TDS under Section 194C on entire amount (both goods and services).

Summary

• Check if the payment is only for goods or goods + services.

• Check turnover of Development Authority and amount of payment to decide if Section 194Q is applicable.

• If applicable, deduct TDS @ 0.1% on amount above ₹50 lakh.