The Finance Act, 2020 had introduced Section 206C (1H) for levy of Tax collected at source (TCS) on sale of goods by a seller from a buyer & thereafter the Finance Act, 2021 has introduced Section 194Q to provide for deduction of tax (TDS) by a buyer from the purchase of goods.
As per Section 194Q of the Income Tax Act, 1961, any person, being a buyer who is responsible for paying any sum to any resident for purchase of any goods of the value where aggregate of such value exceeds Rs. 50 Lacs in any previous year, shall 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, deduct an amount equal to 0.1 per cent of such sum exceeding Rs. 50 Lacs as income-tax (TDS).
Buyer means a person whose total sales, gross receipts or turnover from the business carried on by him exceed Rs.10 crores during the financial year immediately preceding the financial year in which the purchase of goods is carried out.
Further it is clarified that where provisions of both TCS on sale of Goods u/s 206C(1H) and TDS on purchase of Goods u/s 194Q are applicable, provisions of TDS u/s 194Q shall prevail.
As per Section 206 C (1H) of the Income Tax Act, 1961, every person, being a seller, who receives any amount as consideration for sale of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, other than the goods being exported out of India or goods covered in sub-section (1) or sub-section (1F) or sub-section (1G) shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 0.1 per cent of the sale consideration exceeding fifty lakh rupees as income-tax (TCS)
Seller means a person whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which sale of goods is carried out.
|Basis of Distinction||TDS on Purchase of Goods – Section 194Q||TCS on Sale of Goods – Section 206C(1H)|
|Who is Liable||Buyer is liable to deduct the tax||Seller is liable to collect the tax|
|Turnover Limit||T/o > 10 Cr during preceding FY||T/o > 10 Cr during preceding FY|
|Threshold Limit||Purchases from Seller > 50 Lacs during FY||Sales to buyer > 50 Lacs during FY|
|Rate||0.1% of Purchase Value > 50 Lacs during FY||0.1% of Sales Receipts > 50 Lacs during FY|
|Time of deduction||Credit or Payment – whichever is earlier||At the time of receipt|
|PAN not available||5%||1%|
|Quarterly Statement to be filed||26Q||27EQ|
|Certificate to be Issued||Form 16A||Form 27D|
*In the absence of PAN, section 206C(1H) read with section 206CC provides for TCS @1%. However, section 206CCA provides for TCS @5% duly considering provisions of section 206CC.
|Sr. No.||Buyer T/O||Seller T/O||Transaction Value||Taxable Amt||Section Applicable||Remarks|
|I||12 crore||9 crore||60 lacs||10 lacs||194Q|
|II||8 crore||13 crore||55 lacs||5 lacs||206C(1H)|
|III||14 crore||11 crore||52 lacs||2 lacs||194Q||Section 194Q supersedes Section 206C(1H)|
|IV||6 crore||9 crore||60 lacs||NA||Since T/o is less than 10 Crore|
|V||15 crore||12 crore||40 lacs||NA||Since transaction value is less than 50 lacs|
Declaration in respect of section 206AB of the Income-tax Act, 1961 (“Act”) in order to deduct TDS u/s 194Q
Name of Buyer
Address of Buyer
We, “Name of Seller” having registered office at “Address of Seller” having PAN “PAN of Seller” and TAN “TAN of Seller” do hereby solemnly affirm and declare that:
Income-tax returns for the below mentioned financial years are duly filed by us as per the prescribed deadline under the Income-tax Act, 1961.
|Financial Year||Income-tax Return Acknowledgement Number||Due date u/s 139(1) for your organization||Date of filing of Income-tax return|
We declare and certify that aggregate of tax deducted at source and tax collected at source in our case is Rs 50,000 or more in each of the above two Financial Years
We confirm that the above details are true and to the best of our knowledge and any deviation in the same shall be brought to the knowledge of “Name of Buyer” immediately. Further, we would be responsible to “Name of Buyer” for payment of any additional taxes, interest or penalty in case the information is found to be incorrect.
Accordingly, we hereby request you to not deduct TDS as per provisions of section 206AB of the Act.
For Name of Seller,
(Name & Designation of Authorized Signatory)