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TDS194Q

07 July 2021

when party add tcs charges (0.1%)in tax invoice then we can deducted tds 194q against this invoice or not.

Both parties last previous year turn over up to 10crore.

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2 Replies

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

Primary onus is on the buyer to deduct tax at source u/s 194Q. However, if the seller has collected tax, the buyer is not required to deduct tax u/s 194Q again.

Further, if the turnover of both seller and buyer is up to Rs.10 cr in the preceding year, both TCS and TDS are not applicable.

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Shivam RC (Student) (23683 Points)
Replied 08 July 2021

The CBDT vide Circular No. 13 of 2021 dated 30th June, 2021 issued detailed guidelines under Section 194Q of Income-tax Act,1961 (TDS on Purchase of goods), which became effective from July 01, 2021.

As per the above mentioned circular, it was clarified that the buyer is not required to deduct TDS @ 0.1% U/s 194-Q of the Income Tax Act 1961 if the Seller has already collected TCS @ 0.1% U/s 206C(1H) of the IT Act 1961.

EXTRACT from the CIRCULAR :-

"If a transaction is both within the purview of section 194-Q of the Act as well as sub-section (1-H) of section 206C of the Act, the tax is required to be deducted under section 194-Q of the Act. The transaction shall come out of the purview of sub-section (1-H) of section 206C of the Act after tax has been deducted by the buyer on that transaction. Once the buyer has deducted the tax on a transaction, the seller is not required to collect the tax under sub-section (1-H) of section 206C of the Act on the same transaction. However, if, for any reason, tax has been collected by the seller under sub-section (1-H) of section 206C of the Act, before the buyer could deduct tax under section 194-Q of the Act on the same transaction, such transaction would not be subjected to tax deduction again by the buyer. This concession is provided to remove difficulty, since tax rate of deduction and collection are same in section 194Q and subsection (1-H) of section 206C of the Act."

Regards.