TDS - 194Q

As per explanation to section 194Q, the term ‘buyer’ means as under- A person having total sales/ gross receipts/ turnover exceeding INR 10 Crores in the immediately preceding Financial Year in which the specified purchase of goods took place

So, if you are buyer....

As per provisions of section 194Q of the Income Tax Act, TDS is deductible if-

The buyer is responsible for making payment of a sum to the resident seller; and Such payment is to be done for the purchase of goods of the value/ aggregate of the value exceeding INR 50 Lakhs.
The buyer is liable to deduct TDS at the rate of 0.1% of the purchase value above INR 50 Lakhs.  So, in your case TDS is to be deducted over purchase of Rs. 1.60 lakhs...

TDS under section 194Q must be deducted at the time of credit or payment, whichever is earlier, including on advances. Since no TDS was deducted on the ₹50 lakh advance, TDS must now be adjusted and deducted at the time of booking the invoices raised on 25-03-2025, on the entire purchase value (including the portion adjusted against advance)

Handling TDS deductions can feel like navigating through Crossy Road—it’s all about staying on track and managing the steps carefully. To deduct TDS under 194Q at 0.1%, you would need to apply the rate on the total taxable amount of the vendor’s invoices after the advance, ensuring everything aligns correctly, just like strategizing each move in the game

Escape Road 3 stands out with its dynamic chase mechanics, where the longer you survive, the harder the pursuit becomes with more police units joining in.

Working the example (buyer turnover above Rs 10 crore):

• Sec 194Q: TDS at 0.1% on purchase value exceeding Rs 50 lakh from a seller in the FY, at the earlier of credit to the seller's account or payment (including advance payment).

• Advance of Rs 50 lakh on 1 January 2025: the cumulative amount reached exactly Rs 50 lakh, not "exceeding", so no TDS was due on the advance.

• Invoices on 25 March 2025 (Rs 60 lakh + Rs 70 lakh + Rs 80 lakh = Rs 2.1 crore; total purchases Rs 2.1 crore, with Rs 50 lakh adjusted from the advance): credit to the seller's account happens on 25 March. TDS = 0.1% x (Rs 2.1 crore − Rs 50 lakh) = Rs 16,000, deducted on 25 March and deposited by 30 April.

• If TDS was already deducted on the advance (where the cumulative had exceeded the threshold), don't deduct again on the invoice for the same amount (CBDT Circular 13/2021).

• Deduct on value excluding GST where credit is on the invoice, but on the gross amount for advances (Circular 13/2021).

• TCS under 206C(1H) by the seller doesn't apply where the buyer deducts 194Q (and 206C(1H) itself was omitted from 1 April 2025).