TDS on Purchase of Goods Exceeding Rs 50 Lakh under section 194Q

TDS on Purchase of Goods Exceeding Rs 50 Lakh under section 194Q TDS on Purchase of Goods is proposed to be deducted under section 194Q introduced by…

Pratibha Goyal

Mar 7, 2021

Last update on Mar 7, 2021

TDS on Purchase of Goods Exceeding Rs 50 Lakh under section 194Q TDS on Purchase of Goods is proposed to be deducted under section 194Q introduced by Budget 2021.

1. Who is liable to deduct TDS?

Buyer, 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 is liable to deduct TDS.

2. When the provisions of this section will be applicable to the Buyer?

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.

3. What is the Rate of TDS on purchase of goods?

If Seller has PAN: 0.1% If the Seller does not has PAN: 5%

4. What is the value on which TDS has to be deducted?

TDS will be deducted on Purchase value in excess of Rs 50 Lakh. [See Practical Example for better understanding]

5. What if TCS under section 206C(1H) is applicable to the transaction?

If any transaction attracts TCS under section 206C(1H) and TDS under section 194Q, then TDS under section 194Q will be applicable.

6. What if provisions of TDS (other than section 194Q) or TCS (other than section 206C(1H)) are already applied on the transaction?

If provisions of TDS (other than section 194Q) or TCS (other than section 206C(1H)) are already applicable on the transaction then no TDS would be applicable under this section. Let's see some Practical Cases:

Particular	Scenario 1	Scenario 2	Scenario 2
Buyer's Turnover	Rs. 11 Cr	Rs. 9 Cr	Rs. 11 Cr
Seller's Turnover	Rs. 9 Cr	Rs. 11 Cr	Rs. 11 Cr
Purchase Value	Rs. 51 Lakh	Rs. 51 Lakh	Rs. 51 Lakh
TDS u/s 194Q	0.1% on Rs. 1 Lakh	Not Applicable as Buyer's Turnover is Less the Rs. 10 Cr.	0.1% on Rs. 1 Lakh
TCS u/s 206(1H)	Not Applicable as Seller's Turnover is Less the Rs. 10 Cr.	0.1% on Rs. 1 Lakh	Not Applicable due to exception carved out (See 5th FAQ)