Latest TDS/TCS Related Amendments

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Section 194Q

Deduction of tax at source on payment of a certain sum for the purchase of goods.

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 percent. of such sum exceeding fifty lakh rupees as income tax.

Explanation.––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 ten crore rupees 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.

(2) 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.

(3) 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.

(4) 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.

Related Topic:
TCS under section 206C(1H) of income tax Act

(5) The provisions of this section shall not apply to a transaction on which––

(a) tax is deductible under any of the provisions of this Act; and

(b) tax is collectible under the provisions of section 206C other than a transaction to

which sub-section (1H) of section 206C applies.

Provisions Uncloaked

When will this Provision be applicable:

• In case of sale of goods
• Exceeding INR 5 Crore

Who is required to deduct the Tax:

• Buyer
• Buyer means any person whose turnover in the preceding financial year exceeds INR 10 Crore

Related Topic:
TDS on Clearing & Forwarding Agents Payment

When is TDS Required to be covered:

• At the time of payment or credit, whichever is earlier.
• On the amounts exceeding Rs.50 lakh.

Now one more thing to keep in mind that this limit of Rs 50 lakh is for one financial year for each seller, so now this provision is applicable from 1st July 2021, hence TDS is required to be deducted only on purchases after 1st July 2021 but while ascertaining the limit of purchase Rs. 50.00 Lakhs, the purchases from April 1, 2021, purchase will also have to be taken into account.

Related Topic:
Amended TDS chart for 14-5-2020 to 31-3-2021

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