TDS - 194Q

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Dear Experts,

Example - We had given an advance to vendor Rs. 50 lakh on 01.01.2025 and this time we have not deducted TDS under 194Q. After one month, vendor has raised 3 invoices of Rs. 60 lakh, 70 lakh and 80 lakh on 25.03.2025 (all taxable amt) simultaneously. 

Please let me how how to deduct TDS under 194Q. @ 0.1%.

 

 

Replies (4)
Quick Summary
Under Section 194Q, TDS is deductible at 0.1% on purchase value exceeding Rs. 50 lakh in a financial year. If no TDS was deducted on advance payment, deduction may need adjustment at the time of invoice booking or payment, whichever is earlier.

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

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