CA - Ankg & Associates

A new section 194Q (Deduction of tax at source on payment of certain sum for purchase of goods) is inserted by Finance Act – 2021 which is effective from 01/07/2021.

This new section 194Q has given rise to the question “Whether TCS u/s 206C (1H) of Income Tax is to be collected on receipt of sales consideration above 50 Lakhs or TDS u/s 194Q is to be deducted by the buyer on purchase of goods exceeding Rs.50 Lakhs?”

Section 194Q imposes liability to deduct TDS on the Buyer of Goods if value of purchase of such goods from a person exceed Rs.50 Lakhs during the year & Gross turnover in last year (FY 2020-21) is more than Rs.10 crore.

Section 206C(1H) was made effective from 01/10/2020 imposes liability to collect TCS on the seller if amount received from customer for sale of good exceeds Rs.50 Lakhs during the year & Gross turnover in last year (FY 2020-21) is more than Rs.10 crore.

Click below to download Declaration Format to be obtained from Buyer (in case your turnover exceeds Rs.10 crore in last financial year)

Complete Detailed Article written by CA Asha Sharma, Partner of M/s ANKG & Associates, Chartered Accountants “Applicability of TDS U/s 194Q and TCS U/s 206C(1H)” is published by “Tax Guru“, one of the top publication site.

Complete Article as published can be accessed at below link –

https://taxguru.in/income-tax/applicability-tds-u-s-194q-tcs-u-s-206c1h.html

The above Article explains all about –

• Analysis of provisions of Section 194Q

• Analysis of provisions Section 206C(1H)

• Time and manner of deposit of tax with Interest Liability

• Time and manner of furnishing of TDS / TCS statement

• Time and manner of furnishing of TDS / TCS certificates

• Consequences of late deposit of taxes, delay in furnishing of statement / certificates

• Penal consequences

As per combine reading of these two sections of TDS & TCS, if Buyer’s last year turnover was more than Rs.10 crore, then he is liable to deduct TDS @ 0.10 % of the Seller if value of goods purchased is more than Rs.50 Lakhs in the year (TDS on above Rs.50L value).

And if Buyer’s last year turnover is less than Rs.10 crore but Seller’s turnover is more then Rs.10 crore in last year and total collection from buyer is more then Rs.50 lakhs during the year, in this situation seller is liable to collect TCS @ 0.10% on collected amount in excess of Rs.50 Lakhs.

To determine whether TDS is required to be deducted or TCS will be collected, we have prepared a Declaration Format which is suggested to be obtained from your Buyer in case your turnover in last year was more than Rs.10 crore.

Click below to download Declaration Format to be obtained from Buyer (in case your turnover exceeds Rs.10 crore in last financial year)