W.e.f. 01st July, the Government has introduced a new provision for deduction of TDS u/s 194Q, the applicability of which is being reproduced below in a simplified point by point manner:
1. Deduction in which case: Purchase of goods (including capital goods) from a resident seller (This implies that import transactions are out of the purview of this section)
2. Event of deduction: Goods are purchased for a value or aggregate of value exceeding ₹50 lakhs in any P.Y.
3. Applicability: The person buying shall fall into the meaning of buyer as provided for this section. “Buyer means a person whose total sales, gross receipts or turnover from the business, exceeds ₹10 crores during the F.Y. immediately preceding the F.Y. in which goods are purchased.”
4. Rate of TDS: 0.1% (5% in case PAN is not furnished) of the purchase value exceeding ₹50 lakhs.
Explanation: The value on which TDS shall be charged is the sum left after deducting ₹50 lakhs from the total value.
[Total value (-) ₹50 lakhs= value on which TDS shall be charged]
5. Time of deduction: Earlier of
a) Posting a credit entry in the name of the seller in the books of accounts
or
b) At the time of payment by any mode
6. TDS over TCS: Further, in case both sections 194Q and 206C(1H) are applicable then in that case the provisions of section 194Q shall prevail.
This implies that TCS u/s 206C(1H) shall not be collected in case the buyer is liable to deduct TDS u/s 194Q.