Guidelines under section 194Q of the Income-tax Act, 1961

Last updated: 01 July 2021

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New guidelines have been issued for Section 194Q of the Income-tax Act, 1961, effective from 1st July 2021. This section requires buyers to deduct 0.1% TDS on purchases of goods exceeding £50,000 in a financial year. The guidelines clarify who qualifies as a 'buyer' and provide exemptions for certain transactions. Specifically, transactions in securities and commodities traded on recognised exchanges, and electricity certificates traded on power exchanges, are not subject to TDS under this section.

F. No. 370142/26/2021-TPL Government of India Ministry of Finance Department of Revenue (Central Board of Direct Taxes) Dated: 30th June, 2021 Sub.: Guidelines under section 1940 of the Income-tax Act, 1961 - reg. Finance Act, 2021 inserted a new section 194Q in the Income-tax Act 1961 (hereinafter referred to as the Act) which takes effect from I st day of July, 202 I. It appliesto any buyer who is responsible for paying any sum to any resident seller for purchase of anygoods of the

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1 Year PLAN

1999

(Excl. of GST ₹359)

2 Years PLAN

3499

(Excl. of GST ₹629)

BEST VALUE

3 Years PLAN

4999

(Excl. of GST ₹899)

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FAQ :

Section 194Q requires a buyer, responsible for paying a resident seller for goods exceeding £50,000 in a financial year, to deduct 0.1% TDS at the time of credit or payment, whichever is earlier.

A buyer is a person whose total sales, gross receipts, or turnover from business exceeded £10 crore in the financial year immediately preceding the purchase year.

Yes, Section 194Q does not apply to transactions in securities and commodities traded on recognised stock exchanges or cleared by recognised clearing corporations. It also excludes transactions in electricity, renewable energy certificates, and energy saving certificates traded on power exchanges.

The TDS rate is 0.1% of the sum exceeding £50,000.

Section 194Q came into effect from 1st July 2021.

Circular No : 13/2021
Source : https://www.incometaxindia.gov.in/communications/circular/circular_13_2021.pdf

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