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TDS u/a 194Q

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Mohit Agrawal

AUDIT MANAGER

109 Points Posted on 31 July 2021

A Machine having worth Rs. 5,05,000,00/- to be purchased from Seller A. Advance Payment details are as below –

Rs. 1,02,000,00/- have been paid before 31.03.2021.

Rs. 1,00,000,00/- to be paid in Aug. 2021.

Rs. 3,03,000,00/- to be paid in Sept. 2021 after delivery of Machine & Invoicing.

Please suggest amount of TDS to be deducted u/s 194Q ?

Replies (5)

Quick Summary

This discussion clarifies the applicability of TDS under Section 194Q for a machine purchase exceeding ₹50 lakhs. TDS is applicable as the total value surpasses the threshold. The tax rate is 0.1% of the purchase value. TDS should be deducted at the time of payment or credit to the supplier's account, whichever is earlier. Importantly, any advance payments made before 1st July 2021 are exempt from TDS under this section, meaning tax should only be deducted on subsequent payments.

CA. Sourav Sarkar

Chartered Accountant

24588 Points Posted on 31 July 2021

Yes TDS under section 194Q is applicable as purchase value exceeds 50 lakhs rupees

Mohit Agrawal

AUDIT MANAGER

109 Points Posted on 31 July 2021

0.1% of which value ?

When TDS to be deducted i.e at the time of advance payment or at the time of Booking of Invoice ?

CA. Sourav Sarkar

Chartered Accountant

24588 Points Posted on 31 July 2021

At the time of payment to supplier or at the time of credit to his account whichever is earlier.

0.1% of purchase value

CMA Poornima Madhava

CMA

13117 Points Posted on 31 July 2021

Tax u/s 194q to be deducted at source at the time of payment or credit whichever is earlier. Further, CBDT vide it's circular has clarified that if payment has been made prior to 1st July 2021, no TDS in respect of the same.

Hence, you are required to deduct tax at source on the balance payments that you intend to make in aug and sep.