TDS ON PURCHASE OF GOODS [SEC 194-Q]

PROPOSED AMENDMENT:

  • Buyer of all goods will be liable to deduct tax at source @ 0.1% of sale consideration exceeding INR 50 Lakhs in a Financial Year
  • Tax to be deducted @ 5% if the seller does not provide PAN/Aadhar
  • TDS obligation will be on buyers who have gross receipts/turnover exceeding INR 10 Crores in preceding financial year
  • TDS obligation only if the payment is made to a resident seller
  • No requirement of TDS u/s 194-Q on a transaction:
    • if TDS is deductible under any other provision or 
    • TCS is collectible under section 206C [excluding 206C(1H)]
  • This provision is applicable with eect from 1st July 2021.
  • Tax to be deducted at the earliest of the following dates: a. time of credit of such sum to the account of the seller or b. time of payment
  • On a given transaction either TDS u/s 194Q will apply or TCS u/s 206C(1H) will apply
    • Both TDS u/s 194Q and TCS u/s 206C(1H) will not apply on the same transaction 
  • In case of potential overlap between the two provisions
    • TDS u/s 194Q will apply and TCS u/s 206C(1H) will not apply