prpri Which Section 194Q or 206C(1H) will be applicable??? Which Section 194Q or 206C(1H) will be applicable???

1. What is Section 194Q and 206C(1H)?

– Section 194Q is for Tax deducted at source (TDS) applicable from 01.07.2021 and

– Section 206C(1H) is for Tax Collected at source(TCS) applicable from 01.10.2020.

2. When is a person liable to deduct TDS u/s 194Q and TCS u/s 206C(1H)?

-TDS is to be deducted under section 194Q when the following conditions are satisfied-

a. The person (who is a buyer) has turnover/gross receipts/Sales from business of above Rs.10 crore during the F.Y 2020-21.

b. Such payment is to be done of the value/ aggregate of the value exceeding Rs.50 Lakhs to the seller in a financial year.

– TCS shall be deducted under section 206C(1H) when the following conditions are satisfied-

a. The person (who is a seller) has turnover/gross receipts/Sales from business of above Rs.10 crore during the F.Y 2020-21.

b. Receipts of the value/ aggregate of the value exceeding Rs.50 Lakhs to the seller in a financial year.

3. When will be the TDS deducted and at what Rate?

– TDS shall be deducted at the time of Payment or credit to the seller whichever is earlier.

– TDS shall be deducted on advance payment made.

– TDS shall be deducted at the rate of

– 0.1% on amount exceeding Rs.50 Lakhs.

– 5% on amount exceeding Rs.50 Lakhs, in case of non-availability of PAN.

4. When will be the TCS be collected and at what Rate?

– TCS shall be collected at the time of Receipt of sale proceeds.

– TCS shall be collected when advance is received.

– TDS shall be deducted at the rate of

– 0.1% on amount received exceeding Rs.50 Lakhs.

– 1% on amount exceeding Rs.50 Lakhs, in case of non-availability of PAN.

5. Which forms are required to be filed and what will be the periodicity?

– For TDS u/s 194Q- Form 26Q will be required to be filed quarterly.

– For TCS u/s 206C(1H)- Form 27EQ will be required to be filed quarterly.

6. Illustrations of applicability of TDS and TCS-

Buyers Turnover above 10 crores Sellers Turnover above 10 crores Transaction Value above Rs.50 lakhs Section Applicable
No Yes Yes TCS- 206C(1H)
Yes No Yes TDS- 194Q
Yes Yes Yes TDS- 194Q
No No Yes Not Applicable
Yes Yes No Not Applicable
Yes Yes 1.Amount received above 50 lakhs

2.Purchase of goods below 50 lakhs

TCS- 206C(1H)

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Hope this article helps you. Happy reading!!

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This article is for guidance only, not to be substituted for detailed research or the exercise of professional judgment.

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