Applicability of Section 194Q & 206AB under Income Tax Act

Section 194Q: TDS on purchase of goods:

-Applicable to the Buyer whose Turnover/Gross Receipts in the preceeding Financial year exceeds 10Cr. and aggregate amount of purchases from such particular buyer exceeds Rs.50L.

-TDS is required to be deducted @1% on the amount exceeding Rs.50L (The threshold limit of Rs.50L is to be reckoned from the beginning of the Financial year. i.e., 01.04.2021.)

-In the absence of PAN of the seller, TDS is required to e deducted @5%.

If TDS is required to be deducted u/s 194Q, then the provisions of section 206C(1H) will not prevail.

Section 206AB: Special provision for the deduction of TDS for Non filers of Income tax Return:

• If any person who is required is deduct the TDS under the provisons of Chapter XVIIB of the Income Tax Act except under the following sections:
• And the transaction is carried out with the specified person(who has not filed the income tax return for the two immediate preceeding financial years and whose time period for filing the same has been lapsed (i.e., 2018-19 and 2019-20)
• Aggregate amount of TDS and TCS exceeds 50000 in each of the financial year. Then,

It is the responsibility of the deductor to ascertain the rate of TDS. For the purpose of this section, the Deductor will be required to take declaration regarding filing or non filing of Income Tax Return.

And the draft formats are enclosed below:

Format of Declaration for not imposing TDS Rate as per Section 206AB of the Income Tax Act, 1961

To Whom So Ever It May Concern

Declaration form for not imposing Rate as per Sec. 206AB of the Income Tax Act

I/We, ________________, having PAN ________________, am/are resident in India and hereby declare as follows:

Income Tax Returns for the below mentioned financial years have been duly filed by us within the prescribed time limit.

The copy of the ITR acknowledgment of the above mentioned years have been duly enclosed.

I/We hereby declare that I/we am/are duly authorized to give this declaration and the information furnished above is true to the best of my/our knowledge. Further we would be responsible for any interest or penal consequences in case of any misdeclaration.

(Signature)

Name:

Designation:

Date:

Place:

The below format is applicable if the Income Tax return is not filed as mentioned above:

Format of Declaration for not imposing TDS Rate as per Section 206AB of the Income Tax Act, 1961 

To Whom So Ever It May Concern

Declaration form for not imposing TDS Rate as per Sec. 206AB of the Income Tax Act

1. Where I/We have not filed my Return of Income for both the preceding two Financial Years 2018-19 and 2019-20, I/We hereby confirm that the aggregate tax deducted and tax collected at source is /is not Rs. 50,000/- or more in each of the two preceding Financial Years 2018-19 and 2019-20.

2. I/We hereby declare that I/we am/are duly authorized to give this declaration and the information furnished above is true to the best of my/our knowledge. Further we would be responsible for any interest or penal consequences in case of any misdeclaration.

(Signature)

Name:

Designation:

Date:

Place: