TDS on Purchase of Goods Exceeding Rs 50 Lakh under section 194Q
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?
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)|
Please note that the Rate of TCS u/s 206(1H) if the PAN of the Buyer is not available.