The Central Board of Direct Taxes (CBDT) on this Wednesday pinpointed that buyers of goods or services shall have to deduct TDS at the source and at 0.1% of the amount that is greater than Rs 50 lakhs when credited or paid to a resident seller on the transactions that have occurred after July 1, 2021, under the section 194Q of the Income Tax Act 1961 that shall be effective from July 1, 2021.
Latest Update
11th April 2022
- “According to Section 194Q and Section 206C(1H), if your FY 2021-22 turnover is more than 10 crores then these sections shall be applicable from the 1st of April 2022.”
26th November 2021
- The Income-tax department has issued the circular number 20/2021 related to guidelines under Income tax act sub-section (4) of section 194-0, sub-section (3) of section 194Q, and subsection (I-I) of section 206C required to deduct an amount 1 to 0. 1 % if the income is more than fifty lakh. Read Circular
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The Board has specifically pinpointed that the limit of Rs 50 lakhs for the purpose of triggering TDS shall be calculated from April 1, 2021, and the GST component shall have to be set apart at the time of credit. The Board further put clarification that if a transaction comes within the purview of TDS under both section 194O (applicable in the case of e-commerce operators) and section 194Q of the aforesaid Act, deduction shall have to be made as per section 194Q.
Furthermore, when there is a confrontation between the provision of TDS and the provision of TCS wherein goods are sold as per section 206C(1H), provisions of TDS shall apply.
“Addressing the open issues, the circular is just in time and accords much-needed clarity on the subject matter, as the compliance framework becomes effective tomorrow, said Neha Malhotra, director at Nangia Andersen LLP.”
As per section 194Q, every buyer who is responsible for making payment of any amount to a resident seller, for the purpose of purchasing any goods having value or an aggregate value greater than Rs 50 lakhs in any previous year; shall have to at the time of making that payment whichever is earlier, deduct an amount that is equal to 0.1% of such amount that exceeds Rs 50 lakhs as the Income Tax.
As per the circular issued by the Central Board of Direct Taxes 
These types of taxes are directly imposed and paid to the government of India. Example of Direct Tax is Income Tax, TDS, Securities Transaction Tax, Fringe Benefit Tax, etc (CBDT) this Wednesday, the buyer has been defined as the individual whose gross sales or total receipts or total turnover generated from the business carried by him is greater than Rs 10 crore during the financial year in which the goods have been brought.
The circular further pinpointed that when the tax has to be deducted at the time of ‘credit’, TDS under 194W shall have to be deducted on the amount credited exclusively of GST component; however, if tax has been deducted on the criteria of payment basis then TDS shall have to be deducted on the whole amount. The reason being, it will not be possible to recognize the GST component.
Furthermore, it has been pinpointed that while the new provisions should be applicable on advance payment, the same will not be applicable to non-resident whose purchase is not related to the Permanent Establishment of the said non-resident of India.
sir,
my turnover in previous year was 1.5 CR …. and this year it will be around 2.5 CR …. but i have 2 clients whose transaction with me has crossed 50 lacs …. do i have to charge TCS from them .
Please elaborate your query. because in TCS various term and condition applicable in different situation. and for every seller, whose gross turnover in previous year exceeding INR 10 crore and sale consideration exceeding 50 lac from any person required TCS of 0.1%.
if my purchase is only 48 lakhs (less than 50 lakhs) but the payment to the supplier is 85 lakhs (more than 50 lakhs) in the full financial year, then I will liable for TDS deduction u/s 94Q on Payment or Supplier will liable to collect TCS on Receipt ?…….
Provisions of 194Q is applicable on Purchase or payment whichever is earlier.
Dear sir,
TDS as per 194Q, what is the criteria ?
If in the f/y 2021-22 exceeds the 50 lacs limit and 2022-23 if not exceed the 50 lacs limit in this scenario TDS is applicable or not .
When the TDS is to be deducted .
TDS starts from 50 lacs exceeds or if next year not exceeds 50 lacs then also TDS to be deducted ?
Please explain in detailed .
V.Srinivas
If in the F.Y. 2021-22 limit exceeds Rs 50 lacs then the TDS Provisions u/s 194Q is applicable and the Assessee is required to deduct TDS in F.Y. 2022-23 also
My purchase is more than 5 crores and my turnover till jan-23 is 9 crore and it will be 10 crore in the month of Feb-23. Please suggest on which amount i have to deduct tds on purchase above 50 lakhs or only on the purchase for the month of Feb as i have crossed purchase limit for tds which is way more than 50 lakhs
TDS is to be deducted on amounts above Rs 50 Lakhs.
Dear Sir/Madam,
I want to know whether we have to pay TDS on the purchase of goods above 5000000/- that includes GST or before GST amt. and also, whether we have to deduct this amount from the purchase bill amount or we have to bear the TDS amt.
In the year 2022-23 am I liable deduct tds on first purchase from a party from whom I purchased for more than 50 lakhs in the year 2021-22
if purchase is Rs 48,00,000/-. On this purchase GST is Rs. 8,64,000/-. Now total purchase is Rs. 56,64,000/- including GST. now TDS is applicable on this.
As per Section 194Q, No TDS is deducted from the GST amount. TDS is only attracted on the taxable amount of the purchase, here purchases imply the taxable amount exclusive of GST.
I have also same query that TDS u/s 194Q on Goods about threshold limit 50 Lakhs. This threshold limit is applicable for every year or TDS is applicable on Rs. 1 for the vendor whose aggregate purchase crossed Rs. 50 Lakhs in previous financial year
Dear sir
I have query regarding 194Q TDS on Goods about threshold limit 50 Lakh. This threshold limit is applicable for every year.
Eg. If buyer cross the threshold limit FY 21-22 then TDs is applicable but in current year FY 22-23 this new limit is applicable 50 Lakh? it means i am purchase from buyer FY 21-22 & that time i had deduct the TDS under good but from 1st April 2022 i am purchase same buyer those who cross the limit 50 lakh but this year when i deduct TDS after crossing the 50 Lakhs Threshold limit or what ?
50 Lakh threshold limit every year or what.
Dear sir
I have query regarding 194Q TDS on Goods about threshold limit 50 Lakh. This threshold limit is applicable for every year.
Eg. If buyer cross the threshold limit FY 21-22 then TDs is applicable but in current year FY 22-23 this new limit is applicable 50 Lakh? it means i am purchase from buyer FY 21-22 & that time i had deduct the TDS under good but from 1st April 2022 i am purchase same buyer those who cross the limit 50 lakh but this year when i deduct TDS after crossing the 50 Lakhs Threshold limit or what ?
50 Lakh threshold limit every year or what.
The Limit of Rs 50 Lakh is not for every Financial Year. Once the limit of Rs 50Lakh is crossed in any previous year then TDS is required to be deducted for that buyer in every financial year.
If 50 Lakhs limit not for every year, then 194Q threshold limit 50 lakhs for which purpose ? please guide and I am fully confuesed.
2ndly for TCS purpose: 50 Lakhs limit is basic value or invoice value or advance value ?