Tds 194q applicable or not

Section 194Q strictly requires a buyer's turnover to have exceeded ₹10 crore in the previous financial year. Because a newly formed firm has no preceding financial year, it is completely exempt from deducting TDS under 194Q—even for purchases over ₹50 lakh—during its first year of business.

Section 194Q applies to a buyer whose turnover in the preceding financial year exceeded Rs 10 crore, on purchases from a single seller exceeding Rs 50 lakh in the financial year, at 0.1% TDS. For a newly incorporated entity with no preceding year turnover, 194Q is not applicable in the first year of operations regardless of purchase amounts. The Income Tax Act 2025 effective April 1, 2026 has renumbered this provision, but the substance is identical. If you are filing for FY 2025-26, continue using the old section numbering. Full breakdown of all TDS and TCS changes effective FY 2026-27: https://taxgarden.in/blog/tds-tcs-changes-fy-2026-27-complete-guide

Section 194Q kicks in only when the buyer turnover in the immediately preceding financial year exceeded Rs 10 crore. For a newly set-up firm, there is no preceding year, so 194Q does not apply in year one even if purchases from a single seller cross Rs 50 lakh. The threshold resets from April 1 each year, so once your first full year closes and turnover crosses the mark, you start tracking from the next April. We put together a section-by-section breakdown in our [TDS rate chart for FY 2026-27](https://taxgarden.in/blog/tds-rate-chart-2026-to-2027) if you need the full picture.