Income tax updates Newly Inserted Section 194Q
Section 194Q of the Income Tax Act is introduced vide the Finance Act, 2021, has come into effect from 01-07-2021.
The new section 194Q applies to any buyer who is responsible to pay for purchase of goods of the value or aggregate of value exceeding INR 50 Lakh in the Financial Year.
1. Services providers
2. Import purchase from a supplier outside India.
3. Seller whose income is exempt from Income tax (Like RBI, ADB Act. Ect.,).
4. Wherever TDS is applicable under any other section of Income Tax Act 1961.
5. Wherever TCS is applicable under section 206C(1H) of the Income Tax Act 1961.
Definition of Buyer
A person who’s gross receipts, total sales or turnover exceeds INR 10 Crore in the immediately preceding Financial Year. (Note: The threshold of INR 50Lakh shall be computed from 01-04-2021).
Adjustment for GST
The TDS shall be levied on the amount credited or payable to the seller excluding GST.
Non- Compliance of Section 194Q
If TDS as applicable above is not deducted or deducted but not remitted to the department, section 40a(ia) of the Income Tax Act provides for 30% dis-allowance of expenditure while computing the taxable income.
If Clash between TDS U/S 194Q & TCS U/S 206C(1H)
|If Turnover/Gross receipts in the previous FY||If Turnover/Gross receipts in the previous FY||TDS/TCS|
|> INR 10 Crore||< INR 10 Crore||Buyer, TDS U/S 194Q|
|< INR 10 Crore||> INR 10 Crore||Seller, TCS U/S 206C(1H)|
|> INR 10 Crore||> INR 10 Crore||Buyer, TDS U/S 194Q|