Brief note on provisions of Section 194Q [TDS on Purchase of Goods]

The Finance Act, 2021 has introduced new section 194Q which is effective from 1st July 2021. The provisions of new section 194Q require the specified buyer to deduct TDS on the purchase of goods from the resident seller.

Applicable to whom :-
The provisions of this section will be applicable to the Buyer if the turnover of Buyer is more than Rs 10 Crore during the Financial Year immediately preceding the Financial Year in which the purchase takes place.

Who will be Responsible for Deducting TDS:-

Buyer is liable to deduct TDS. Buyer means who is responsible for paying to any resident for the purchase of goods of the value or aggregate of such value in excess of Rs 50 Lakh in any previous year.

When TDS is deducted:-

Earlier of the following:

1. At the time of credit of the sum into the account of the seller; or
2. At the time of payment of the sum thereof.

TDS Rate:-

1. If Seller has PAN: 0.1%
2. If the Seller does not has PAN: 5%

Exemption available under section 194Q-

TDS provisions are not applicable under the following cases:-

1. Transactions on which TDS is already deductible under other provisions of the Income Tax Act; or
2. Transactions on which TCS is collectable as per provisions of section 206C [other than a transaction on which TCS is collectable under section 206C(1H)].