TDS on Purchase of Goods-TDS Section 194Q
Section 194Q on Tax Deducted at source
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 ₹50 Lakhs(Fifty lakh rupees) in any financial 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% of such sum exceeding ₹50 Lakhs as income-tax.
The provisions of Section 194Q are given in simple terms as follows:
- Buyer means: For the purpose of this Section 194Q, ‘Buyer‘ means a person whose total sales, gross receipts or turnover from the business carried on by him exceed ₹10 Crore during the financial year immediately preceding the financial year in which the purchase of goods is carried out;
- TDS over and above ₹50 Lakh: TDS will be deducted on any sum paid over and above ₹50 Lakh in a financial year. This means TDS is not applicable on the whole amount rather on any sum exceeding ₹50 Lakh only in a financial year;
- Rate of TDS: TDS @0.10% will have to be deducted on any sum exceeding ₹50 Lakh only;
- If PAN not submitted: If the seller does not provide his PAN, in that case, the buyer has to deduct TDS @5% as per the newly amended section 206AA of the Income Tax Act;