TDS ON Purchase of goods-Section 194Q

Section 194Q of the Income Tax Act,1961- (TDS ON Purchase of goods)

  • TDS should be deducted on purchase of goods of value exceeding 50 lacs from a Resident Supplier during the year
  • TDS rate : 0.1%
  • If Seller does not give PAN , TDS Rate is 5%
  • Applicability: It is applicable to Assessees whose turnover during the preceding year exceeds 10 Crs
  • TDS to be deducted at the time of credit in the books or actual payment, whichever is earlier A credit to any account like Suspense etc will be covered and TDS will apply
  • If any other TDS provisions apply to a transaction, 194Q is not applicable
  • If transaction is covered under 206C (except 206C(1H)), 194Q is not applicable For example , if Alcoholic liquor, tendu leaves, scrap, motor vehicles etc purchased, 194Q not applicable ,
  • But goods as per 206C(1H) are purchased , 194Q is applicable
  • The TDS is to be deducted on the purchases in excess of Rs. 50 lacs
  • For example: if A purchases goods worth 52 lacs from B in a year , TDS will be deducted by A on 2 lacs only.