In this blog we are going to touch an important change bought in the tax law in recent budget announced by our Honb'le Finance Minister Ms Nirmala Sitharaman by proposing Section 194Q which will be in force from 1st July 2021.
So, let us understand what is Section 194Q, when is it applicable, at what rate TDS will be deducted, and so on.
Section 194Q is related to payment of certain sum as TDS for purchase of goods. Any buyer who pays any sum to the seller for purchase of goods whose aggregate value is above Rs. 50 lakhs, is at the time of crediting the sum to the seller's account or at the time of making payment is liable to deduct an amount equal to 0.1% as TDS of such sum exceeding Rs. 50 lakhs.
A buyer needs to be an assessee whose aggregate turnover in the immediate previous year was above Rs. 10 crores.
TDS is deducted:
Whichever is earlier
Under Section 194Q of the Income Tax Act, 1961 TDS is required to be deducted at:
This means that if TDS or TCS is required to be deducted then this section is not applicable. But when TCS u/s 206C(1H) is applicable along with this section then TDS u/s 194Q shall also be deducted.
If the buyer fails to deduct TDS u/s 194Q then 30% of the amount on which tax was supposed to be deducted will be disallowed as expenditure.
Seller's Turnover: Rs. 15 crores
Buyer's Turnover: Rs. 15 crores
Payment for purchase of goods in previous year: Rs. 55 Lakhs
Since the Buyer's Turnover is more than Rs. 10 crores, he will have to deduct TDS u/s 194Q on Rs. 5 lakhs (Rs. 55 lakhs- Rs. 50 lakhs) @ 0.1% which is Rs. 500.
TCS u/s 206C(1H) is not applicable as TDS u/s 194Q is deducted.
Note: In case seller's PAN is not available then TDS @5% will be deducted i.e., Rs. 25,000
An assessee will have to make the payment electronically through internet banking facility or by way of debit cards. To deposit the tax, the deductor will have to fill Challan No. ITNS 281, or the TDS so deducted can also be deposited into any branch of the RBI or SBI or any authorised bank.
Tax deducted during the month shall be deposited on or before the following due date:
|Type of Deductor||Mode of payment of TDS||Due Date for deposit of TDS|
|Office of Government||Without Income tax Challan ITNS 281||On the same day on which tax is deducted|
|With Income tax Challan ITNS 281||Within 7 days from the end of the month in which tax is deducted|
|Other Deductor||With Income tax Challan ITNS 281||
28th March, 2023
7th February, 2023
20th June, 2022
27th May, 2022
3rd December, 2021
14th May, 2021
29th April, 2021
19th March, 2021
1st February, 2021
16th December, 2020
7th December, 2020
9th November, 2020
17th December, 2019
13th November, 2019
21st August, 2019
12th August, 2019
25th June, 2019