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TCS u/s 206C(1H) in case default u/s 194Q

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vishal vyas

3 Points Posted on 06 December 2021

If buyer is not deducting TDS u/s 194Q than whether seller by virtue of proviso to subsection 206C(1H) is required to collect tax and deposit the same along with interest?

Above question arises in the backdrop of following proviso to subsection 206C(1H)

Provided further that the provisions of this sub-section shall not apply, if the buyer is liable to deduct tax at source under any other provisions of this act on the goods purchased by him from the seller and has deducted such amount.

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Quick Summary

This discussion explores whether a seller must collect Tax Collected at Source (TCS) under Section 206C(1H) when a buyer fails to deduct Tax Deducted at Source (TDS) under Section 194Q. The core issue revolves around the proviso to Section 206C(1H), which states that TCS provisions do not apply if the buyer is liable to deduct TDS and has done so. The query highlights a situation where the buyer is liable but not deducting, and the buyer's TDS isn't appearing on the seller's Form 26AS.