• 194Q - Buyer must deduct TDS @0.1% on purchase of goods of transaction value exceeding 50 lakhs if the Seller is Resident of India and Turnover of Buyer in previous year exceeds 10 crores (excluding GST).
• 206C(1H) - Seller must collect TCS @0.1% on sale of goods of receipt value (including previous year dues) exceeding 50 lakhs (Total receipt), provided Seller Turnover in previous year exceeds 10 crores (Excluding GST)
The core difference between Transaction value and Receipt value is based on inclusion of previous year dues received during the year in computing “Receipt value” and excluding the same in computing “Transaction value”.
Section 194Q always overrides Section 206C(1H) but as per Circular No.13/2021, if, for any reason, TCS has been collected by Seller u/s 206C(1H), before Buyer could deduct TDS u/s 194Q on the same transaction, TDS not required to be deducted again by Buyer.
The following documents are to be prepared and submitted with the officer while filing the application with DC.
194Q applicable on the aforesaid transactions w.e.f 01/07/2021
If Buyer fails to deduct TDS u/s 194Q for which it is applicable, then the burden would automatically be shifted to Seller and seller needs to collect TCS u/s 206C(1H)
If PAN of Seller is not available, then TDS @5% to be deducted u/s 194Q instead of 0.1%
The above rule applies also in case of Purchase of goods which are not covered by GST, but covered by Other State levies (i.e., VAT, excise duty, etc.)
In the cases where Debit note is issued for a purchase for which 194Q is applicable,