TDS on purchase of Goods under section 194Q from 01.07.2021 introduced by Finance Act 2021.

TDS on purchase of Goods under section 194Q from 01.07.2021 introduced by Finance Act 2021.

Provision relating to deduction of TDS :-

Point of Deduction ;-

or

at the time of payment thereof by any mode

Whichever is Earlier

Definition of the Buyer :

For Example, If Mr X purchases goods during F.Y 2021-22 then the threshold of Rs 10 crore shall be checked for F.Y 2020-21.

Non Applicability:-

Conclusion :-

The above section shall be attracted if both the condition has to be satisfied cumulatively:-

AND

Consequences in case of non-compliances:-

If the buyer fails to comply with above mentioned provisions then the following no consequnces will follow :-

Note :-In case the seller does not furnish his Pan then the rate shall be 5 %.

Other Points relating to section 194 Q:-

Some Example for better understanding of Section 194Q:-

Example no 1

Mr Ram (Buyer) Purchases Goods worth Rs 80,00,000/-as on 31.07.2021 from MrShyam (Seller). Turnover of Mr Ram was Rs 10 CroreDuring the F.Y 2020-21.

Since the turnover of Mr Ram being a buyer during the F.Y 2020-21 was up to Rs 10 Crore hence this Section does not get attracted –No TDS shall be deducted

Example no 2 –

Mr Ram (Buyer) Purchases Goods worth Rs 80 Lakhs-as on 31.07.2021 from MrShyam (Seller). Turnover of Mr Ram was Rs 11CroreDuring the F.Y 2020-21.

Since the turnover of Mr Ram being a buyer during the F.Y 2020-21 was aboveRs 10 Crore hence this Section get attracted –The TDS shall be deducted @ 0.1% on Rs 30 Lakhs (80 Lakh-50 Lakh) since both the conditions has been satisfied.

Example no 3–

Mr Ram (Buyer) Purchases Goods worth Rs 80 Lakhsas on 31.07.2021 from MrShyam (Seller). Turnover of Mr Ram was Rs 11 CroreDuring the F.Y 2020-21 and also turnover MrShyam was Rs 25 Crore during the F.Y 2020-21

Since the turnover of Mr Ram and Shyam was more than 10 Crores during preceding F.Y 2020-21.hence provisions of both the section (i.e section 194 Q and Section 206C(1H)) will get attracted –TDS will be deducted under section 194Q Only as per provisions of Income Tax Act.

Example no 4 –

Mr Ram (Buyer) Purchases Goods worth Rs 49 Lakhsas on 31.07.2021 from MrShyam (Seller). Turnover of Mr Ram was Rs 11 CroreDuring the F.Y 2020-21.

Since the Turnover of Preceding F.Y was more than 10 Crore of Mr Ram but purchase of goods does not exceeds 50 Lakhs during 2021-22 hence No TDS shall be deducted.

Example no 5 –

Mr Ram (Buyer) Purchases Goods worth Rs 49 Lakhs as on 31.07.2021 from MrShyam (Seller). Turnover of Mr Ram was Rs 11 CroreDuring the F.Y 2020-21 and also turnover MrShyam was Rs 25 Crore during the F.Y 2020-21

Since the Turnover of Preceding F.Y was more than 10 Crore of Mr Ram but purchase of goods does not exceeds 50 Lakhs during 2021-22 hence No TDS shall be deducted under section 194Q irrespective of the turnover of buyer or seller exceeds Rs 10 Croresduring 2021-22

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