TDS on payment of certain sum for purchase of Goods-New Section 194Q inserted by The Finance Bill Budget 2021-22

Applicability of Section 194Q

This Section Applies to an Assessee (Buyer) whose Gross Receipts/Sales/Turnover in the Preceding financial year Exceed Rs. 10 Crore & when Aggregate amount of purchase from a particular buyer in the financial year Exceeds Rs. 50 Lakh.

Non-Applicability of Section 194Q

  • A transaction on which tax is deductible under any provision of the Act
  • A transaction, on which tax is collectible under the provisions of section 206C other than transaction to which sub-section (1H) of section 206C applies

Rates of Section 194Q & Other Provisions of Section 194Q

Some Scenarios of Section 194Q

Particulars Scenario-1 Scenario-2 Scenario-3
Turnover of Seller (In Cr.) 12 6 12
Turnover of Buyer (In Cr.) 6 12 12
Sale of Goods (In Cr.) 2 2 2
Sales Consideration paid during the year (In Cr.) 1 1 1
Who is liable to deduct or collect tax? Seller Buyer Buyer
Rate of Tax 0.1% 0.1% 0.1%
Amount on which tax to be deducted or collected (In Cr.) 0.5 1.5 1.5
Tax to be deducted or collected 5,000/- 15,000/- 15,000/-

Compiled by: – CA Ayush Agarwal, CA Piyush Agarwal

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April 2021