Introduction:
Budget 2021 proposes to introduce new Section 194Q.It would be effective from 01.07.2021.
Who is required to deduct TDS u/s 194Q:
Any person being a buyer who is responsible for paying any sum to any resident seller for purchase of any goods of the value of aggregate of value exceeding Rs 50 lakh in any previous year, shall deduct TDS at the time of payment or at the time of credit, whichever is earlier.
Explaination:
“Buyer” means a person whose total sales, gross receipts or turnover from the business carried on by him exceed Rs 10cr during the Financial Year immediately preceding the Financial Year in which the purchase of goods is carried out.
Non applicability of the section:
The provisions of this section shall not apply to a transaction on which-
a) tax is deductible under any of the provisions of this Act &
b) tax is collectable u/s 206C(1H)
Rate at which TDS is require to be deduct:
Buyer is required to deduct TDS @0.1% of such sum exceeding 50 lakh.
Difference between 194Q & 206C(1H):
| Particulars | 194Q | 206C(1H) | ||
| W.e.f | 01.07.2021 | 01.10.2020 | ||
| Purpose | Tax deducted at Source | Tax Collected at Source | ||
| Points/ Explanation | Turnover/gross receipts/ sales from the business of BUYER should exceed Rs 10cr. | Turnover/gross receipts/sales from the business of SELLER should exceed Rs 10cr. | ||
| Timings of tax deduction | Payment date or credit date whichever is earlier | On receipt basis | ||
| Rates | i) 0.1% (on amount exceeding Rs 50lakh)
ii) 5% (If PAN is not available) |
i) 0.1(0.075% till 31.03.202)[on amount exceeding Rs 50lakh]
ii) 1% (If PAN is not available) |
||
| Non-applicability |
|
Transaction on which TDS/TCS is applicable under other provisions of the act and the same has been complied with (Meaning thereby; in a situation where TDS has been deducted u/s 194Q this section will not apply) |
EXAMPLES:
| Buyer t/o | Seller t/o | Transaction Value | Section applicable |
| 5cr | 11cr | 55 lakh | 206C(1H) |
| 17cr | 7cr | 58 lakh | 194Q |
| 15cr | 14cr | 54 lakh | 194Q |
| 3cr | 7cr | 58 lakh | NA |
| 15cr | 18cr | 45 lakh | NA |
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