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TDS on Purchase Query

sathya kumar s (AUDIT STAFF) (183 Points)

07 September 2021

One of our client has turnover over 10 Crs in FY 2020-21. and He made purchase from one party in june 2021 which is around 60 lakhs and they charged TCS for Rs 10,00,000. But he made payment of around 55,00,000 in july only when there was tds on purchase provision. Now is he required to pay tds under section 194Q for such payment made in July ? Invoice is of june Month where the vendor has charged TCS on sales.

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4 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160332 Points)
Replied 07 September 2021

As the TCS was already applied over the transaction; sec, 194Q is not applicable. TDS need not be deducted.

CMA Poornima Madhava (CMA) (13097 Points)
Replied 07 September 2021

Even if TCS would not have been collected by the seller, 194Q would not apply if invoice is pertaining to a period prior to 1st July 2021.

That is if either invoice or payment is accounted/made prior to 1st July 2021, 194Q would not apply when such invoice is subsequently paid or when such invoice is subsequently accounted, as applicable.

sathya kumar s (AUDIT STAFF) (183 Points)
Replied 07 September 2021

TCS so Charged in the invoice is reversed through a credit note by the vendor. He is following receipt basis for depositing TCS to the government. since our client paid amount in july month and our turnover is more than 10 crores in the previous year the vendor opines that our client have to deduct tds u/s 194Q while paying amount to them.

CMA Poornima Madhava (CMA) (13097 Points)
Replied 07 September 2021

This point has clearly been clarified by CBDT vide their circular no.13 of 2021 dated 30th June, 2021.

Refer clause 4.2 of the circular for more:

https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwjxvabP5uzyAhW5xjgGHfxYC5oQFnoECAMQAQ&url=https%3A%2F%2Fwww.incometaxindia.gov.in%2Fcommunications%2Fcircular%2Fcircular_13_2021.pdf&usg=AOvVaw3AOONc0iPm2y4KPEP3Bqlr