Section 194Q-TDS Deduction on purchase of goods

Applicability of Section 1st July 2021

A person being a buyer who is responsible for paying any sum to any resident seller

for purchase of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year.

Time of Deduction of TDS

at the time of credit of such sum to the account of the seller

or

at the time of payment thereof by any mode, whichever is earlier, deduct an amount equal to 0.1 per cent of such sum exceeding fifty lakh rupees as income-tax.

Notes

• Buyer means a person whose total sales, gross receipts or turnover from the business carried on by him exceed 10 crore rupees during the financial year.

• Buyer will not include any person notified by the Central Government

• in case the Permanent Account Number (PAN) of the seller is not available. Then, the buyer would be liable to deduct tax @5%

• TDS is also deductible under section 194Q 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.

• if buyer fails to comply with the tax deduction provisions covered under section 194Q. Then, as per the provision of section 40a(ia), there would be disallowance of expenditure up to 30% of the value of the transaction

Exemption available under section 194Q-

TDS provisions covered under section 194Q are not applicable under the following cases-

• Transactions on which TDS is already deductible under other provisions of the Income Tax Act;

• Transactions on which TCS is collectable as per provisions of section 206C

• When the seller is a non-resident