Section 194Q has been inserted in the Income Tax Act which talks about TDS being deducted on Purchase of Goods by the Buyer @ 0.1% of the sum exceeding Rs. 50 Lacs.
Readers will recall the section being similar to Section 206C(1H) which inserted the law of collecting TCS on Sale of Goods.
||0.1% of sum exceeding Rs. 50 Lacs.
[Tax to be deducted @ 5% Ø if the seller does not provide PAN/Aadhar]
|If any sum is credited to a ‘Suspense’ account, or by any other name, in the books of account of the person liable to pay such income, such credit of income shall be deemed to be the credit to the account of the payee and the provisions of this section shall apply accordingly.|
TDS u/s 194Q overrides TCS u/s 206C(1H), i.e. in case where both TDS under 194Q and TCS under section 206(1H) is applicable, then only TDS on Purchase of Goods u/s 194Q shall be deductible.
If Buyer fails to deduct TDS u/s 194Q; then 30% of such sum will be disallowable u/s. 40(a)(ia)
The Tax is required to be deducted or collected at source (TDS/TCS) at rates higher than prescribed, if the transaction is incurred with the resident person who:
Not Applicable to following transactions:
Rate of TDS or TCS: Higher of the following:
<On letter head of entity>
Dear sir / Madam
We, <name of party> have registered / head office at < address> having PAN: < PAN>. We hereby make the following declarations in relation to Section 206AB under Income tax Act, 1961
1. We have filed our income tax returns for immediately last two preceding Financial Years for which due date to file return of Income has expired as per sub section (1) of section 139 of the Income Tax Act,1961 and details of which are as given under:
|F. Year||A.Y.||Date of filing||ITR Acknowledgement Number|
2. The aggregate of tax deducted at source and tax collected at source in our case in Form 26AS is more / not more than INR 50,000 in each previous year.
3. Above confirmation is true and correct to the best of our knowledge and belief. We will indemnify Company for any loss or liability incurred by it on account of any misrepresentation made through this declaration.
For < name of party>