Section-194Q : TDS on Purchase of Goods exceeding Rs. 50 Lakhs
The Finance Act, 2021 has introduced new section 194Q. It is effective from 1st July 2021. The provisions of section 194Q require the specified buyer to deduct TDS on the purchase of goods from the resident seller.
As per provisions of section 194Q of the Income Tax Act, TDS is deductible if-
(i) The buyer is responsible for making payment of a sum to the resident seller; and
(ii) Such payment is to be done for the purchase of goods of the value/ aggregate of the value exceeding Rs. 50 Lakhs.
Explanation : For the purposes of this sub-section-
“buyer” means a person whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees (Rs. 10 Crores) during the immediately Preceding financial year.
Note : IF Central Government is the buyer, this section will not be applicable.
Time Limit for deduction of TDS under section 194Q : TDS to be deducted at the earliest of the following dates-
|At the time of Credit of such sum to the account of the seller|
|At the time of payment of the sum.|
Rate of TDS under section 194Q : Buyer of all goods will be liable to deduct tax at source-
|(i) @ 0.1% of sale consideration exceeding Rs. 50 Lakhs in a Financial Year.|
|(ii) Tax to be deducted @ 5% if the seller does not provide PAN.|
Exemption available under section 194Q :
TDS provisions covered under section 194Q are not applicable under the following cases-
(i) Transactions on which TDS is already deductible under other provisions of the Income Tax Act; or
(ii) Transactions on which TCS is collectable as per provisions of section 206C [other than a transaction on which TCS is collectable under section 206C(1H)].
Important Points :
(i) Provisions of Sec-194Q are applicable from 1st July 2021.
(ii) TDS u/s 194Q is also deductible against any amount credited to ‘suspense account’ or any other account under the books of accounts of the person liable to make payment of such income.
(ii) On a given transaction, either TDS u/s 194Q will apply OR TCS u/s 206C(1H) will apply.
(iii) In case of potential overlap between the two provisions : TDS u/s 194Q will apply and TCS u/s 206C(1H) will not apply.
(iv) Section 194Q is not applicable when the seller is a non-resident.
For Your Understanding : Section 206C (1H) which is already part of Income Tax Act which deals which TCS on sales of goods above 50 lakhs @ 0.1% casts responsibility of seller of goods to collect TCS at the time of collection above 50 lakhs.