TDS on purchases under section 194Q wef 01 July 2021
TDS On Purchases Of Goods ( Sec 194Q)
As per section 194Q(1) “Any person, being a buyer who is responsible for paying any sum to any resident (hereafter in this section referred to as the seller) for purchase of any goods of the value or aggregate of such value exceeding fifty lakh rupees 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 fifty lakh rupees as income-tax.”
1. Applicability:- All the purchaser whose turnover in preceding year is more than 10 crores is liable to deduct TDS on those transactions which meet the criteria :-ü
ü Goods must be purchased from resident.
ü Goods purchased for a value of excessing Rs 50 Lakhs.
ü
Section 194Q clarifies that no tax is required to be deduct under this provision if tax is deducted under any other provision or tax collected under section 206C.
The buyer is liable to deduct TDS if the purchase made through resident and purchases made from outside India or purchase from e commerce company which are registered outside India then equalization levy shall be charged.
2. Rate of TDS:- TDS rate will be 0.1% if the seller provide pan otherwise TDS will be deducted @5% for those supplier does not furnished PAN details.
3. Process Of Depositing & Submission of Return:-
Ø TDS deducted need to be pay within 7 days of the next month.
Ø Every tax deductor shall submit quarterly TDS return in Form 26Q.
Ø Every tax deductor shall issue TDS certificate in FORM 16A.
If the buyer fails to deduct TDS, 30% of the expenditure will be disallowed.
Provision Of The Sections are:-
Ø 194Q. (1) Any person, being a buyer who
is responsible for paying any sum to any resident (hereafter in this section
referred to as the seller) for purchase of a
ny goods of the value or aggregate
of such value exceeding fifty lakh rupees 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 fifty lakh rupees as income-tax. Explanation.
Ø For the purposes of this sub-section, “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, not being a person, as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.
Ø Where any sum referred to in sub-section (1) is credited to any account, whether called “suspense account” or by any other name, in the books of account of the person liable to pay such income, such credit of income shall be deemed to be the credit of such income to the account of the payee and the provisions of this section shall apply accordingly.
Ø If any difficulty arises in giving effect to the provisions of this section, the Board may, with the previous approval of the Central Government, issue guidelines for the purpose of removing the difficulty.
Ø Every guideline issued by the Board under sub-section (3) shall, as soon as may be after it is issued, be laid before each House of Parliament, and shall be binding on the income tax authorities and the person liable to deduct tax
Conflict between 206C and 194Q:- After study the memorandum to finance act it clarifies that in case of a where both TDS under the section 194Q and TCS under section 206C(1H) is applicable, then only TDS u/s 194Q shall be deductible.
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