TDS u/s 194Q and Section 206AB

Query is related to deduction from purchase bills

 eg.

Purchase  Basic  Rs. 1000

GST @ 5%                    Rs. 50

Total Invoice Value   Rs. 1050/-

As per section 194Q, I supposed, to  deduct TDS @ 0.10% on Rs. 1000/-  i.e.. Rs. 1/-

But, if the supplier is requested for early payment discount i.e. cash discount, and we deduct some amount e.g.

Purchase Basic   1000

GST                       50

Less Cash Discount  -20

Total Payable  Rs. 1030/- 

In this respect, TDS should be deducted on Rs, 1000/-  or Rs. 980 (Rs. 1000 - discount 20%)

Thanks in advance

 

 

Replies (4)
Quick Summary
This discussion clarifies the application of TDS under Section 194Q and Section 206AB concerning purchase bills. It addresses how early payment or cash discounts impact the base amount on which TDS should be deducted. The consensus is that TDS should be calculated on the net amount payable after deducting any discounts, as the provisions apply to the payment or credit amount, whichever is earlier.

I think Tax shall be deducted for Rs 980
On 1000 -Applicable.

Also 194 Q -Applicable for advance payments.

Since the provisions apply on payment or credit whichever is earlier,TDS is to be deducted on Rs.980.

Section 194Q of the Income Tax Act is recently introduced vide the Finance Act, 2021. Under section 194Q “It is provided for TDS by the person responsible for paying any sum to any resident for purchase of goods. 10% of the Purchase transaction or payment thereof whichever is earlier.

 Section 206AB and 206CCA mandates TDS or TCS at a higher rate for non-filing of returns in the previous two financial years for certain notified taxpayers referred to as 'Specified Persons.

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