194Q Vs. 206C(1H) of the Income Tax act, 1961

CA Preksha Choraria , Last updated: 07 February 2021
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194Q versus 206C(1H) of the Income Tax act, 1961

The Finance Bill, 2021 has introduced section 194Q - TDS on purchase of goods which is having resemblance to section 206C(1H)- TCS on Sale of Goods brought in by Finance Bill, 2020. There is ambiguity regarding their simultaneous applicability to businesses, which is explained as under:

194Q Vs. 206C(1H) of the Income Tax act, 1961

	194Q	206C(1H)
Particulars	Remarks
Purpose	Tax to be DEDUCTED	Tax to be COLLECTED
Applicable to	Buyer/Purchaser	Seller
Counter party	Resident Seller	Resident Buyer
Triggering point	Turnover/Gross Receipts/Sales from the business of BUYER should exceed Rs.10cr during previous year (Excluding GST) Purchase of goods of aggregate value exceeding Rs.50Lakhs in P.Y. (The value of goods includes GST)	Turnover/Gross Receipts/Sales from the business of SELLER should exceed Rs.10cr during previous year (Excluding GST) Sale consideration received exceeds Rs.50Lakhs in P.Y. (The value of goods includes GST)
W.e.f	01/07/2021	01/10/2020
Timing	Payment or credit, whichever is earlier	At the time of receipt
Advances	TDS shall be deducted on advance payments made	TCS shall be collected on advance receipts
Rate of TDS/TCS	0.1%	0.1% (0.075% for FY 2020-21)
PAN not available-Rate of TDS	5%	1%
On which amount	On amount exceeding Rs.50 Lakhs	On amount exceeding Rs.50 Lakhs
Not applicable to	Transactions on which TDS is applicable under other provisions of the act Transactions on which TCS is applicable under section 206C other than 206C(1H)	Transactions on which TDS/TCS is applicable under other provisions of the act and the same has been complied with (Meaning thereby; in a situation where TDS has been deducted u/s 194Q, this section will not apply)
Exclusions	Yet to be notified by government	If Buyer is- Importer of goods Central/State Government, Local Authority An embassy, High Commission, legation, commission, consulate and trade representation of a foreign state.
TAN Requirement	Yes	Yes
When to deposit/collect	Tax so deducted shall be deposited with government by 7^th day of subsequent month	Tax so collected shall be deposited with government by 7^th day of subsequent month
Quarterly statement to be filed	26Q	27EQ
Certificate to be issued to seller/buyer	Form 16A	Form 27D

Example:

Sr No.	Buyers Turnover	Sellers Turnover	Transaction Value	Section Applicable
1	5Cr	11Cr	55Lakhs	206C(1H)
2	15Cr	7Cr	58Lakhs	194Q
3	12Cr	13Cr	54Lakhs	194Q
4	7Cr	5Cr	58Lakhs	NA
5	12Cr	15Cr	45Lakhs	NA

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The views expressed above are of the author and does not intent for any professional guidance.

Attached File : 967401_43911_194q.pdf

Published by

CA Preksha Choraria
(CA-Practicing)
Category Income Tax Report

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Comments

08 July 2021 kiran

Will 206C applicable which is 1% on 10laks and more receipt now or 206C(1h) will prevail 206C. My question is if the collection on sale of motor vehicles is above 10 lakhs what percentage of TCS to be collected or not to be collected?

01 March 2021 PANKAJ KUMAR

Purchase of goods of aggregate value exceeding Rs.50Lakhs in P.Y, not a P.Y, it is exceeding Rs.50Lakhs previous month.

02 March 2021 PANKAJ KUMAR
Yes, it is the Purchase of goods of aggregate value exceeding Rs.50Lakhs in P.Y.

08 February 2021 PRAMOD KUZHIEL

Very useful

06 February 2021 jayesh chauhan

Tysm preksha...u r doing a great job

06 February 2021 Manish Kedia

In case both buyer and seller turnover is more then 10cr the way 194q why not 206c(1h)..

06 February 2021 CA Preksha Choraria
Refer Proviso to section 206C(1H) which states as under: Provided further that the provisions of this sub-section shall not apply, if the buyer is liable to deduct tax at source under any other provision of this Act on the goods purchased by him from the seller and has deducted such amount.

06 February 2021 Y.R.Purushothama Reddy

Thank you very much

06 February 2021 Y.R.Purushothama Reddy

Is TDs appicalble on own purchases

06 February 2021 CA Preksha Choraria
This section is applicable on TDS on purchase of goods for business purpose only.

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194Q Vs. 206C(1H) of the Income Tax act, 1961

194Q versus 206C(1H) of the Income Tax act, 1961

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