Brief Introduction:

> TDS section 194Q has been introduced in Budget 2021 and will get applicable from 1st July, 2021

> TCS section 206C(1H) has been effected from 1st October, 2020

> Let us see both the sections in detail.

DISCUSSION

PARTICULARS SECTION 194Q SECTION 206C(1H)
Purpose Tax to be deducted Tax to be collected
Applicability Buyer/Purchaser Seller
Counter party Resident Seller Resident Buyer
Trigger point
  • Turnover/ Gross Receipt/ Sales from the business of BUYER should exceed Rs 10 crore during the year (FY 20-21) (excluding GST)
  • Turnover/ Gross Receipt/ Sales from the business of SELLER should exceed Rs 10 crore during the year (FY 19-20) (excluding GST)
W.E.F 1st July, 2021 1st October, 2020
Timing of tax deduction Payment or credit whichever is earlier At the time of receipt
Advances TDS shall be deducted on advance payment made TCS shall be collected on advance receipts
Rates
  • 0.1%
  • 5% (If PAN not available)
  • on amount exceeding Rs 50 Lakhs
  • 0.1% (0.075% for FY 2020-21)
  • 1% (If PAN not available)
  • On amount exceeding Rs 50 Lakhs
Not applicable to
  • Transactions on which TDS is applicable under other provisions of the act
  • Transactions on which TCS is applicable under 206C other than 206C(1H)
  • Transaction on which TDS/TCS is applicable under other provisions of the act and the same has been complied with (Meaning thereby; in a situation where TDS has been deducted u/s 194Q this section will not apply)
Exclusion Yet to be notified by Government
  • If buyer is –
  • Importer of goods
  • Center/State Govt., Local Authority
  • An embassy, High Commission, consulate and trade representation of a foreign state
TAN requirement YES YES
When to deposit/collect

 

  • Tax so deducted shall be deposited with government by 7th day of subsequent month
  • Tax so deducted shall be deposited with government by 7th day of subsequent month
Form 26Q 27EQ
Certificate to be issued to seller/buyer Form – 16A Form – 27D

Example:

Example:

Author Bio

Qualification: CA in Practice
Company: S PARTH & CO
Location: AHMEDABAD, Gujarat, IN
Member Since: 28 Jan 2021 | Total Posts: 1

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10 Comments

  1. Kailash Serashiya says:

    Yes it’s very informative article with very quick overview with great presentation.. seriously you’r affords are deserved appreciation..

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