Section – 194Q
Deduction of Tax at Source on Payment of Certain Sum for Purchase of Goods
Applicable Date:
Provisions of Section 194Q are applicable from 01-07-2021.
Who is liable and when to deduct tax under Section 194Q?
The tax shall be deducted from the purchases made by a buyer if the following conditions are satisfied:
1. There is a purchase of goods from a resident person;
2. Goods are purchased for a value or aggregate of value exceeding Rs. 50 Lakhs in current financial year; and
3. The buyer carrying on a business whose total sales, gross receipts or turnover from the business exceeds Rs.10 crores during the F.Y. immediately preceding the F.Y. in which such goods are purchased.
When Not Applicable?
However, the provision of this section shall not apply if:
Tax is deductible under any of the provisions of this Act: and
Tax is collectible under the provisions of section 206C other than a transaction to which 206C (1H) applies.
Timing of deduction of Tax
Tax is required to be deducted at the time of credit of such sum to the account of the seller or at the time of payment thereof by any mode, whichever is earlier.
Rate of TDS
The tax shall be deducted by the buyer of goods at the rate of 0.1% of the purchase value EXCEEDING Rs 50 lakhs if the seller has furnished his PAN or Aadhaar, otherwise, the tax shall be deducted at the rate of 5%.
Section – 206C(1H)
TCS ON SALE OF GOODS
Applicable Date:
Provisions of Section 206C(1H) are applicable from 01-10-2020
Who is liable and when to collect tax under Section 206C(1H)?
The tax shall be collected by the seller from buyer, on an amount received exceeding INR 50 Lakhs at the rate of 0.1%, following conditions are satisfied:
1. If seller total sales, gross receipts or turnover from the business carried on by him exceed Rs. 10 crore rupees during the financial year immediately preceding the current financial year;
2. The seller receives any amount as consideration for the sale of any goods of the value or aggregate of such value exceeding INR 50 lakhs in any previous year from such buyer.
When Not Applicable?
If the buyer of the goods comes under the following category-
a. the Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State.
b. a local authority as defined in the Explanation to clause (20) of section 10.
c. Importer of goods.
Moreover, the above section shall not be applicable 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. That means, buyer should be liable to deduct TDS and has deducted TDS on such transactions (say section 194Q), then the provisions of section 206C(1H) shall not apply.
Timing of Collection of Tax
The law requires that the seller shall collect from the buyer a sum equals to 0.1% of the sales consideration at the time of receipt of such amount.
Rate of TCS
The tax shall be collected by the seller of goods at the rate of 0.1% of the sale value EXCEEDING Rs 50 lakhs if the buyer has furnished his PAN or Aadhaar, otherwise, the tax shall be deducted at the rate of 1%.
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