Coverage :-
i. Analysis of provisions of Section 194Q
ii. Analysis of provisions Section 206C(1H)
iii. Time and manner of deposit of tax with Interest Liability
iv. Time and manner of furnishing of TDS / TCS statement
v. Time and manner of furnishing of TDS / TCS certificates
vi. Consequences of late deposit of taxes, delay in furnishing of statement / certificates
vii. Penal consequences
viii. Recently issued CBDT Circular No. 13 dated 30th June, 2021 on “Guidelines U/s 194Q”
A new section 194Q (Deduction of tax at source on payment of certain sum for purchase of goods) is inserted by Finance Act – 2021 effective from 01/07/2021.
This new section 194Q has given rise to the question “Whether TCS u/s 206C (1H) of Income Tax is to be collected on receipt of sales consideration above 50 Lakhs or TDS u/s 194Q is to be deducted by the buyer on purchase of goods exceeding Rs.50 Lakhs?”
TCS section 206C(1H) (for brevity hereinafter referred to as TCS provision, unless specified otherwise) was inserted by Finance Act, 2020 and was made effective from 01/10/2020.
TCS provision was made applicable on `Seller of Goods’ who receives any amount as consideration for sale of any goods of the value or aggregate of such value exceeding Rs.50 Lakhs during a financial year.
“Seller” means a person whose total sales, gross receipts or turnover from the business carried on by him exceed Rs.10 crore during the financial year immediately preceding the financial year in which the sale of goods is carried out.
It implies for FY 2020-21, Seller means person whose total sales, gross receipts or turnover from business exceeds Rs.10 crore in the FY 2019-20.
Due to limited scope of person falling within the definition of “Seller” U/s 206C(1H), there were instances where consideration received during the year exceeds Rs.50 Lakhs but TCS provision was not applicable because Sales / turnover / receipts from business was less than Rs.10 crore in last year.
Government had also visualize this situation and to bring those type of transactions within the ambit of tax collection / deduction, it introduced section 194Q by Finance Act, 2021.
This TDS section 194Q is very similar to TCS section 206C(1H). However both these sections are mutually exclusive i.e. if one section becomes applicable the other will not apply.
As per section 206C(1H), TCS will not be applicable if buyer is liable to deduct TDS under any other provisions of the Act. On the contrary, section 194Q does not create any such exception for the transactions on which tax is collectible under section 206C(1H).
The provisions of Section 194Q supersedes Section 206C(1H) and imposes primary liability on buyer to deduct tax.
As per section 194Q, 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 Rs.50 Lakhs during the year, shall deduct TDS @ 0.10%, on amount exceeding Rs.50 Lakhs.
“Buyer” means a person whose total sales, gross receipts or turnover from the business carried on by him exceed Rs.10 crore during the financial year immediately preceding the financial year in which the purchase of goods is carried out.
Which means for FY 2021-22, Buyer means person whose total sales, gross receipts or turnover from business exceeds Rs.10 crore in the FY 2020-21.
Let us understand the applicability and all intricacies of both the sections in simple manner. For better comparative analysis, provisions are presented below in tabulated form:
| TDS Section 194Q | TCS Section 206C(1H) | |
| Applicable on | Purchase of Goods | Receipt of consideration on Sale of Goods
|
| Effective Date | 01st July, 2021 | 01st October, 2020
|
| Who is responsible for TDS / TCS
|
Deductor – Buyer will deduct TDS of seller | Collector – Seller will collect TCS from buyer |
| Meaning of Buyer | Buyer means a person carrying on business whose total sales, gross receipts or turnover from the business exceeds Rs.10 crores during the financial year immediately preceding the financial year in which such goods are purchased.
(For FY 2021-22, turnover of buyer for the FY 2020-21 is to be considered)
|
Buyer means a person who purchases any goods, but does not include,-
a) Government, Embassy, High Commission, legation, consulate, trade representation of foreign state b) Local Authority c) Importer of the goods |
| Meaning of Seller | Not explained or defined in section 194Q | Seller means a person carrying on business whose total sales, gross receipts or turnover from the business exceeds Rs.10 crores during the financial year immediately preceding the financial year in which the sale of goods is carried out
(For FY 2021-22, turnover of seller for the FY 2020-21 is to be considered)
|
| When TDS / TCS will apply (Trigger point) | When payment (paid or payable) to a seller for purchase of any goods of the value or aggregate of such value exceeds Rs.50 Lakhs during the year.
|
Seller shall at the time of receipt of such amount, collect from the buyer, a sum equal to 0.10% of the sale consideration exceeding Rs.50 Lakhs. |
| Rate of TDS / TCS | TDS @ 0.10 % of such sum exceeding Rs.50 Lakhs | TCS @ 0.10% of the sales consideration received exceeding Rs.50 Lakhs
|
| Rate of TDS / TCS if PAN / Adhaar not furnished | As per 2nd Proviso to section 206AA, in case deductee (Seller) does not furnish its PAN, then TDS @ 5% will be applicable | As per 1st Proviso to section 206C(1H) read with section 206CC, in case collectee (Buyer) does not furnish its PAN / Adhaar, then TDS @ 1% will be applicable.
|
| Effective date from which threshold limit of Rs.50 Lakhs is to be considered | Threshold limit of Rs.50 Lakhs shall be computed from 01/04/2021 (for financial year 2021-22). It implies that if a buyer purchased goods of value exceeding Rs.50 Lakhs up to 30/06/2021 from a seller then TDS under section 194Q shall apply on all purchases on or after 01/07/2021. | Since section 206C(1H) was introduced by the Finance Act, 2020, w.e.f 01/10/2020. For the FY 2020-21, threshold of Rs.50 Lakhs shall be computed from 01/04/2020. It implies that if a Seller had received consideration of Rs.50 Lakhs or more upto 30/9/2020 from buyer, TCS under 206C(1H) shall apply on all consideration received on and after 01/10/2021.
For FY 2021-22, Threshold limit of Rs.50 Lakhs shall be computed from 01/04/2021 and TCS will be applicable as and when consideration received (including any previous dues / advance payment) crosses Rs.50 Lakhs limit.
|
| Residential Status | Deductee (i.e. Seller) is Resident Indian | Collectee (i.e. Buyer) is Resident Indian
|
| Time of deduction / Collection | TDS shall be deducted at the time of Credit to the account of seller or Payment, whichever is earlier. The tax shall be deducted even if the sum is credited to the ‘Suspense Account’ or any other account by whatever name called.
|
Seller shall at the time of receipt of such amount, collect from buyer, a sum equal to 0.10% of the sale consideration exceeding Rs.50 Lakhs |
| Non Applicability / Overriding effect | Section 194 Q will not apply if:-
i) Tax is deductible under any of the provisions of this Act,
ii) Tax is collectible under the provisions of section 206C other than a transaction to which section 206C(1H) applies. |
Section 206C(1H) will not apply if :-
i) Where consideration is received on account of export of goods out of India,
ii) Goods covered U/s 206C(1) such as tendu leaves, timber, scrap, alcoholic liquor for human consumption, minerals, etc
iii) Goods being Motor vehicle as specified U/s 206C(1F)
iv) Goods being money received by authorized dealer for remittance as specified U/s 206C(1G)
v) If the buyer is liable to deduct TDS under any other provision of this Act on the goods purchased by him from the seller and has deducted such amount
|
| Treatment of Debit Note / Credit Note issued, if any |
CBDT Circular 13/2021 dt. 30/06/2021 clarifies that if against this purchase return, the money is refunded by the seller then TDS may be adjusted against the next purchase against the same seller. However No Adjustment is required if the purchase return is replaced by the goods by the seller
|
Since TCS is required to be collected at the time of receipt of consideration, no question of credit note arises. Any adjustment of debit note / credit note must have been done by the buyer before making payment to seller.
It has also been clarified by way of CBDT Circular No. 17/2020 dt. 29/09/2020 |
| Whether TDS / TCS to be made on Including GST or Excluding GST value | CBDT Circular 13/2021 dt. 30/06/2021 clarifies that –
i. When TDS is deducted at the time of credit of amount in the account of seller and in terms of the agreement or contract between the buyer and the seller, the component of GST is indicated separately, Tax shall be Deducted U/s 194Q on the amount credited without including such GST. ii. If the TDS is deducted on payment basis because the payment is earlier than the credit, the tax would be deducted on the whole amount. |
CBDT Circular No. 17/2020 dated 29/09/2020, it was clarified that TCS U/s 206C(1H) is applicable on amount of sales consideration and no adjustments on account of indirect taxes (including GST) is required to be done. So TCS is required to be collected on value including GST amount. |
| What if Buyer / Seller holds multiple GSTINs | Threshold limit of Rs.10 crore as well as Rs.50 Lakhs shall be computed annually on PAN basis and not GSTIN basis | Threshold limit of Rs.10 crore as well as Rs.50 Lakhs shall be computed annually on PAN basis and not GSTIN basis |
| Time Limit to Deposit of TDS / TCS | As per Rule 30 of Income Tax Rules, 1962, TDS shall be deposited to the credit of Central Government electronically –
– On or before 7th day of subsequent month in which TDS is deducted, and – Where TDS is deducted in March, due date of deposit is 30th April |
As per Rule 37CA of Income Tax Rules, 1962, TCS shall be deposited to the credit of Central Government electronically –
– On or before 7th day of subsequent month in which TCS is collected. |
| Which Statement (Return Form) to furnish for TDS / TCS | As per Rule 31A of Income Tax Rule, 1962 read with section 200(3) :-
Statement of deduction of tax shall be furnished on Quarterly basis in Form 26Q |
As per Rule 31AA of Income Tax Rule, 1962 read with section 206C(3) :-
Statement of collection of tax shall be furnished on Quarterly basis in Form 27EQ |
| Time Limit to furnish TDS / TCS Statement (Return) | As per Rule 31A – Quarterly statement in Form 26Q shall be furnished by the end of the month succeeding the end of quarter, except for March quarter.
Statement shall be furnished by – i) For the quarter ended 30th June – Furnish 26Q by 31st July; ii) For the quarter ended 30th September – Furnish 26Q by 31st October; iii) For the quarter ended 31st December – Furnish 26Q by 31st January; and iv) For the quarter ended 31st April – Furnish 26Q by 31st May. [For the FY 2020-21, these time limits were extended & due date of furnishing 26Q for the quarter ended 30th June 2020 & 30th September 2020 was 31st March 2021 and that of Quarter ended 31st March 2021 is 30th June 2021] |
As per Rule 31AA -Quarterly statement in Form 27EQ shall be furnished within 15 days of the month succeeding the end of quarter, except for March quarter.
Statement shall be furnished by – i) For the quarter ended 30th June – Furnish 27EQ by 15th July; ii) For the quarter ended 30th September – Furnish 27EQ by 15th October; iii) For the quarter ended 31st December – Furnish 27EQ by 15th January; and iv) For the quarter ended 31st April – Furnish 27EQ by 15th May. [For the FY 2020-21, these time limits were extended & due date of furnishing 27EQ for the quarter ended 30th June 2020 & 30th September 2020 was 31st March 2021 ] |
| Time & manner of issuing Certificate of Deduction / Collection of Tax | As per Rule 31 of Income Tax Rule, 1962 read with section 203 :-
(TDS) Certificate for deduction of tax at source shall be issued in Form -16A on quarterly basis within 15 days of from the due date for furnishing the statement of TDS (Form 26Q) under Rule 31A. Certificate issued shall be generated electronically from Traces website |
As per Rule 37D of Income Tax Rule, 1962 read with section 206C(5) :-
(TCS) Certificate of collection of tax at source shall be issued in Form -27D on quarterly basis within 15 days of from the due date for furnishing the statement of TDS (Form 27EQ) under Rule 31AA. Certificate issued shall be generated electronically from Traces website |
| Whether Buyer / Seller can apply for Lower / Nil Deduction certificate (Section 197 / 197A) | No
Since no consequential amendments introduced in section 197 / 197A to extend the benefit to assessee to apply for a certificate for deduction of tax at lower rates or to file declaration for nil deduction in respect of transactions covered under Section194Q |
No
Since no consequential amendments introduced in section 197 / 197A to extend lower / nil rate benefit. Section 206C(1H) also does not allow the buyer to apply for the lower or nil TCS certificate. |
| Interest levy on Failure to Deduct / collect tax or payment of tax | As per section 201(1A) – If person responsible for deducting TDS fails to deduct or after deductions, there is failure to pay tax to the government as required under the act, simple interest will be payable as under –
(i) Interest @ 1% for every month or part of the month from the date on which such tax was deductible to the date on which such tax is deducted; and (ii) Interest @1.50% for every month or part of a month from the date on which such tax was deducted to the date on which such tax is actually paid. |
As per section 206C(7)- If the person responsible for collecting tax does not collect the tax or after collecting the tax fails to pay tax to the government as required under the act, simple interest will be payable as under –
(i) Interest @ 1% for every month or part of the month from the date on which such tax was collectible to the date on which such tax is deducted |
| Fee U/s 234E on delay in furnishing TDS / TCS statement (Late Fee) | Any delay in furnishing quarterly TDS Statement (Form 26Q), Late fee of Rs.200/- per day will be payable for every day during which the failure continues.
However the amount of late fee shall not exceed the amount of tax deductible. |
Any delay in furnishing quarterly TCS Statement (Form 27EQ), Late fee of Rs.200/- per day will be payable for every day during which the failure continues.
However the amount of late fee shall not exceed the amount of tax collectible. |
| Penalty for delay in / non furnishing of TDS / TCS Certificates | As per section 272A(2)(g)
Any delay in furnishing TDS certificate to deductee will attract penalty of Rs.100/- per day for every day during which the failure continues. However the amount of penalty shall not exceed the amount of tax deductible |
As per section 272A(2)(g)
Any delay in furnishing TCS certificate to collectee will attract penalty of Rs.100/- per day for every day during which the failure continues. However the amount of penalty shall not exceed the amount of tax collectible |
| Penalty on Delay / Incorrect furnishing of TDS / TCS statement | In addition to late fee as prescribed U/s 234E, Assessing Officer can levy penalty U/s 274H (which ranges from minimum Rs.10,000/- to maximum Rs.1,00,000/-) for late / incorrect furnishing of TDS statement. | In addition to late fee as prescribed U/s 234E, Assessing Officer can levy penalty U/s 274H (which ranges from minimum Rs.10,000/- to maximum Rs.1,00,000/-) for late / incorrect furnishing of TCS statement. |
| Penalty for Failure to Deduct / Collect Tax | As per section 271C – If any person fails to deduct the whole or any part of the tax as required , then such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay as aforesaid. | As per section 271CA – If any person fails to collect the whole or any part of the tax as required, then such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to collect as aforesaid. |
| Prosecution on Failure to Pay Tax | As per section 276B – If a person fails to pay to the credit of the Central Government – Any tax deducted at source by him, he shall be punishable with rigorous imprisonment for a term which shall not be less than 03 months but which may extend to 07 years and with fine. | As per section 276BB – If a person fails to pay to the credit of the Central Government, the tax collected by him as required under the provisions of section 206C, he shall be punishable with rigorous imprisonment for a term which shall not be less than 03 months but which may extend to 07 years and with fine. |
| Disallowance of Expenditure | Non-Compliance of Section 194Q
As per the provisions of Section 40a(ia) – If buyer fails to deduct and deposit TDS at applicable rates, expenditure to the extent of 30% will be disallowed |
Not applicable |
On the basis of analysis of Section 194Q & 206C(1H), following position is arrived at to determine whether TDS is applicable or TCS is applicable.
Illustration:
| Buyer | Seller | Purchase by Buyer | Receipt by Seller | Primary Responsibility of TDS / TCS |
|
Turnover > 10Cr
|
Turnover > 10Cr
|
Above Rs.50L | Above Rs.50L | TDS by Buyer |
| Below Rs.50L | Above Rs.50L | TCS by Seller | ||
| Below Rs.50L | below Rs.50L | N/A | ||
| Above Rs.50L | below Rs.50L | TDS by Buyer | ||
|
Turnover > 10Cr
|
Turnover < 10Cr
|
Above Rs.50L | Above Rs.50L | TDS by Buyer |
| Below Rs.50L | Above Rs.50L | N/A | ||
| Below Rs.50L | below Rs.50L | N/A | ||
| Above Rs.50L | below Rs.50L | TDS by Buyer | ||
|
Turnover < 10Cr
|
Turnover > 10Cr
|
Above Rs.50L | Above Rs.50L | TCS by Seller |
| Below Rs.50L | Above Rs.50L | TCS by seller | ||
| Below Rs.50L | below Rs.50L | N/A | ||
| Above Rs.50L | below Rs.50L | N/A |
If Buyer & Seller both fulfilled the criteria for applicability of Section 194Q & 206C(1H) applicability ?
As per second proviso to section 206C(1H) – if the buyer is liable to deduct tax at source under any other provision of this Act on the goods purchased by him from the seller and has deducted such amount, then provision of section 206C(1H) shall not apply.
Although primary responsibility to deduct TDS in this case is of buyer but it should also be that buyer has actually deducted such amount.
Any failure on the part of Buyer to deduct TDS in this case will make Seller liable for TCS.
Some Other Important Issues on Applicability of Section 194Q as Clarified by CBDT Circular No. 13 dated 30/06/2021 are:-
1. Whether Non-Resident can be Buyer under section 194Q of the Act ?
Clarification :- Section 194Q shall not apply to a Non-Resident Buyer where purchase of goods is from Seller Resident in India & such Purchase is not effectively connected with the Permanent Establishment of such non resident..
2. Whether Section 194Q applies when Seller is the person whose Income is Exempt ?
Clarification :-
Section 194Q shall not apply on purchase of goods, where Seller as a person is exempt from income tax under the Act (like person exempt U/s
10) or under any other Act passed by the Parliament (Like RBI Act, ADB Act etc.).
Subject to the condition that it would not apply if only part of the income of the person (being a seller) is exempt.
3. Whether Section 206C(1H) applies when Buyer is the person whose Income is Exempt ?
Clarification :-
This Circular further clarifies that Section 206C(1H) shall not apply to sale of goods where buyer as a person is exempt from income tax under the Act (like person exempt U/s 10) or under any other Act passed by the Parliament (Like RBI Act, ADB Act etc.).
Subject to the condition that it would not apply if only part of the income of the person (being a buyer) is exempt.
4. Whether provisions of section 194Q of the Act shall apply to buyer in the year of incorporation?
Clarification :-
Not applicable in the year of incorporation
5. Whether provisions of section 194Q of the Act shall apply to buyer who has turnover or gross receipt exceeding Rs.10 crore but total sales or gross receipts or turnover from business is Rs 10 crore or less ?
Clarification :-
Sales or Gross Receipts or Turnover from Business carried on by Buyer must exceed Rs 10 crore. And accordingly turnover or receipts from non-business activity is not to be counted for this purpose
6. Cross application of section 194-0, sub-section (lH) of section 206C and section 194Q of the Act.
Clarification :-
If tax deducted by E-Commerce Operator U/s 194-O
– That transaction shall not be subjected to TDS U/s 194Q of the Act and (IH) of section 206C
If a transaction is both within the purview of section 194-O & 194Q / 206C(1H)
– If a transaction is both within the purview of section 194-O as well as Section 194Q, TDS U/s 194-O will be required and not section 194Q.
– If a transaction is both within the purview of section 194-O as well as Section 206C(1H), TDS U/s 194-O will be required and the transaction shall come out of the purview of Section 206C(1H).
– It is clarified that here primary responsibility is on e-commerce operator to deduct the tax under section 194-O of the Act and that responsibility cannot be condoned if the seller has collected the tax U/s 206C(1H) of the Act. This is for the reason that the rate of TDS U/s 194-O is higher than rate of TCS U/s 206C(1H).
If a transaction is both within the purview of section 194Q and 206C(1H)
– Then the tax is required to be deducted U/s 194-Q.
– However, if, for any reason, tax has been collected by the seller U/s 206C(1H) of the Act, before the buyer could deduct tax under section 194-Q of the Act on the same transaction, such transaction would not be subjected to tax deduction again by the buyer.
– This concession is provided to remove difficulty, since tax rate of deduction and collection are same in section 194Q and subsection(IH) of section 206C of the Act.
(Republished with amendments)
Author Bio
Please clarify whether Can Section 194Q and 206C(1H) is applicable on sale of exempted goods like Onion and Potato. Please also guide whether these section applicable on commission agents (Aarhati) of Onion Potato etc, ie exempted goods
we receive goods from LIMITED COMPANY they have multiple stock points with different pan number and different GST number which is COMPANY authorized partner/distributor/agent and GST invoice raised by individual stock point with his own identity.
In this regard we have taken purchase as per the mentioned GST number in the Tax Invoice with applicable pan card of them.
In our case we have taken purchases from two locations which are mentioned below and we have made a payment in a single location.
Now we have questioned that as per the TDS Section 194 Q we have to deduct TDS to our buyer when we make a purchase or make a payment to our vendor when the amount was crossed to 50 Lacs in a single year in a single pan (Permanent account Number).
Purchase Location
1. PVT LTD COMPANY – GUJARAT
2. LIMITED COMPANY – PUNJAB
Payment Location
1. PVT LTD COMPANY – GUJARAT
which location is liable to bare TDS ?
Request to provide proper clarification with government notification which is known as a circular.
Dear Jignesh,
More details are required to analyze the situation. In case turnover of buyer is less than Rs.10 crore in immediately preceding the financial year then 194Q is not applicable.
For any further discussion on this matter you can directly reach out to me #[email protected]
Great article, covers all the aspects under the Section 194Q & 206c(1H).
I have one query:
If the turnover of seller is less than 10 crore & the turnover of buyer is also less than 10 crore, then neither of them i.e the seller & buyer is not liable to collect TCS or deduct TDS?
Is this correct, kindly guide.
Thanks in advance.
Thanks for your appreciation sir
In case Turnover of both seller as well as buyer is less than Rs.10 crore in immediately preceding the financial year then neither 194Q nor 206C(1H) applicable
HOW TO CALCULATE 10 CRORE TURNOVER ….WEATHER TO INCLUDE GST OR EXCLUDE GST
Dear Sir
In my opinion if the GST component is shown separately in books then Rs.10cr turnover limit should be excluding GST
Rs. 50 Lacs limit is with GST or without GST part?
In case of advance payment of 60 Lacs (with 18% GST) how much TDS need to deduct?
Dear Ms. Asha ji,
Thanks for the article having immense detailed clarification, its worth reading.
Just one query, In case where buyer liable to deduct TDS u/s 194Q but he had not deducted. In such cases whether seller is liable to collect TCS u/s 206C(1H)?
yes
Can you explain it with an example where buyer purchases goods above 50 lakhs and seller sells goods less than 50 lakhs?
For Ex B ltd (Buyer) purchases goods for above Rs50 Lakhs from S Ltd (Seller) then B Ltd is liable to do TDS
For any further discussion on this matter you can directly reach out to me #[email protected]
Superb & Excellent:
All the aspects covered and explained in a systematic & understable manner.
Thank you very much madam.
Thanks for your kind words
TDS 194Q how to interest calculate
Bill Date : 31-08-2021
Bill Amount:- 90,000
TDS Amount :- 90
Interest amount ?
Please Help Me
As per Sec 206C – Interest is computed in following manner –
1. For Late Deduction: At 1%for every month or part of a month, on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted
2. Late Payment/Deposited: At 1% for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid
Assuming you have deducted TDS on date 31/08/2021 & deposited on 06/10/2021 then interest @ 1 % for 02 months i.e. Rs.2/-
However as per Rule 119A(c) NIL interest is payable.
Rule 119A(c) read as under –
The amount of tax, penalty or other sum in respect of which such interest is to be calculated shall be rounded off to the nearest multiple of one hundred rupees and for this purpose any fraction of one hundred rupees shall be ignored and the amount so rounded off shall be deemed to be the amount in respect of which the interest is to be calculated.
Excellent :
All the aspects covered and explained in a systematic manner
Thanks for your kind words
Say A and B both having turnover more than 10 crores in previous year, now there are two different transaction, One – A Sales Milk worth Rs. 60 lacs to B, And in another transaction A Purchases cattle feeds worth Rs. 51 lacs from B, In this case TDS / TCS both Applicable ? or Only TDS will be applicable ? To Whom ?
Section 194Q shall apply to both A & B.
On the basis of limited facts present in your query, there are two transactions of Purchases which are Purchase of Milk by B & Purchase of Cattle Fees by A, so TDS will be applicable on both A &B on respective purchases made by them
I hope your query is resolved.
for more explanation & discussion I can be reached at # [email protected]
very fruitful article,very nice.
Thanks for your kind words
Mam,
Its not clear, If Seller add TCS with Invoice that time Buyer can deduct TDS 194Q .
Regards,
Biplab
Sir
TCS U/s 206C(1H) is applicable at the time of receipt of amount, so adding TCS on Invoice is not as per the provisions of law.
It is suggested to communicate to the seller about the fact regarding applicability of sec 194Q on buyer, so that provisions of law can be complied with in correct & desired manner.
I hope your query is resolved.
for more explanation I can be reached at # [email protected]
SIR JEE PLEASE CLARIFY THAT IF A COMPANY COLLECT TCS THAN IT IS NECESSARY TO DEDUCT TDS IT IS VERY CONFUSION
Sir
As per Law , in a case both Buyer & Seller falls within the criteria of 194Q / 206C(1H) , then by virtue of 2nd proviso to section 206C(1H) Buyer is required to deduct TDS.
However as per recent circular No. 13/2021 issued by CBDT on dt. 30/06/2021, Para 4.9.5(v) “If, for any reason, tax has been collected by the seller U/s 206C(1H) of the Act, before the buyer could deduct tax U/s 194-Q on the same transaction, such transaction would not be
subjected to tax deduction again by the buyer.
This concession is provided to remove difficulty, since tax rate of deduction and collection are same.
But since TDS is applicable on Payment / credit whichever is earlier and TCS is applicable on Receipt , so TDS will always be done first.
For more clarifications you may write to author at # [email protected]
Whether this concession is permanent OR applicable only to the transactions already done ?
Guideline Circular issued by CBDT 13/2021 dt 30/06/2021 uses the word “if for any reason” , there can be different interpretation of these words and there by different opinions.
For more discussion I can be reached at # [email protected]
Madam, Your article is excellent.
May you please also provide for New Section 206AB and 206 CCA @ my email ID [email protected]
Best Regards
Ashok Kumar Modi
Thanks Ashok ji for your words of appreciation.
For New Section 206AB and 206 CCA you may contact us anytime
at my mail ID – [email protected]
Both the sections are explained in depth and precisely
I have a query,
What is the definition of “goods” here, does it also include purchase of assets such as Laptops etc? or only goods used in normal business.
Dear Mr. Sandeep Shetty ji
Thanks for your words of appreciation
“Goods” is not defined under Income tax Act. As per Sale of Goods Act & CGST Act goods are defined as “goods means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply” .
It can be referred here also & accordingly TCS / TDS, as the case may be, will apply on all goods whether capital goods or otherwise.
Asha hi
I just read your article, it’s very useful article and clearly explained.
But we are concern about the view of Govt with respect to ease of doing business, as lots of new rules and law are creating problems for the small businesses
best of luck for your future endeavour’s
Dear Mr. Pradeep Sharma ji
Thanks for your appreciation and good wishes.
we being chartered accountants, are financial consultant of many MSME enterprises, are also concerned with ever changing laws Vs Ease of Doing Business specially related to MSME Sector.
However this would be not be an appropriate platform to discuss all the pros and cons. You are most welcome to reach us at : [email protected]
Hi,
Thank you for your update and kindly clarify, is this rule and acts applicable to MSME , Turnover is less than 10 Cr and Non of the company eighter sales or purchase Rs.50 Lakhs from any one company. This will help us to be safe and we are getting many intimation from the bigger Company, need to act on the same or ignore such intimations etc , Many Thanks in advance.
Dear Prakash Ji
In case your turnover / gross receipts in previous financial year (say FY 2020-21) is less than Rs.10 crore then you are not required to deduct TDS U/s 194Q or collect TCS U/s 206C(1H) during the FY 2021-22.
But if your supplier / customer are covered in any of these sections then they will deduct / collect tax as per rules, in case your payment to supplier exceeds Rs.50 Lakhs or your customer buys goods for value above Rs.50 Lakhs from you.
Further in case your turnover / gross receipts is less than Rs.10 crore and there is no payment for purchase of goods or sale of good above Rs.50 Lakhs, then neither your supplier nor your customer will collect TCS or deduct TDS.
I hope your query is resolved.
for more explanation I can be reached at ” [email protected] “
Thanks for the article.
Both the sections are explained in a systematic manner
I have a query, as u mentioned
“Any failure on the part of Buyer to deduct TDS in this case will make Seller liable for TCS.”
Please explain / give the reference of the Section which mentions the Seller will be utimately be responsible, if TDS not deducted by Buyer.
Dear Ms. Shikha
Thanks for your appreciation
Proviso to sec 206C(1H) says if the buyer is liable to deduct TDS xxxxxxxxxx AND has deducted such amount.
This “AND” is very important in this place. on the basis of language of this proviso It can be presumed that if Buyer is liable to deduct but he has not deducted then this proviso will not apply and accordingly TCS will be applicable.
To add to this , Buyer can also be treated as assessee in default on this part. but that is not part of our discussion here so I will not dig deep into it.
Nicely explained / covered all the area of relevant sections
Thanks Mr. Anuj Somani Ji.