Section 194Q - Tax Deduction on the Purchase of Goods

Deduction of tax at source on payment of certain sum for purchase of goods

194Q. (1) Any person, being a buyer who is responsible for paying any sum to any resident (hereafter in this section referred to as the seller) for purchase of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, shall, at the time of credit of such sum to the account of the seller or at the time of payment thereof by any mode, whichever is earlier, deduct an amount equal to 0.1 per cent of such sum exceeding fifty lakh rupees as income-tax.

Explanation.- For the purposes of this sub-section, "buyer" means a person whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the purchase of goods is carried out, not being a person, as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.

(2) Where any sum referred to in sub-section (1) is credited to any account, whether called "suspense account" or by any other name, in the books of account of the person liable to pay such income, such credit of income shall be deemed to be the credit of such income to the account of the payee and the provisions of this section shall apply accordingly.

(3) If any difficulty arises in giving effect to the provisions of this section, the Board may, with the previous approval of the Central Government, issue guidelines for the purpose of removing the difficulty.

(4) Every guideline issued by the Board under sub-section (3) shall, as soon as may be after it is issued, be laid before each House of Parliament, and shall be binding on the income-tax authorities and the person liable to deduct tax.

(5) The provisions of this section shall not apply to a transaction on which-

(a) tax is deductible under any of the provisions of this Act; and
(b) tax is collectible under the provisions of section 206C other than a transaction to which sub-section (1H) of section 206C applies.

Introduction

The Finance Act, 2020, inserted Sub-Section (1H) in Section 206C to provide for the collection of tax by a seller from the amount received as consideration for the sale of goods if it exceeds Rs. 50 lakhs in any previous year. On the similar lines, the Finance Act, 2021, has inserted a new Section 194Q to provide for deduction of tax by a buyer from the purchase of goods. As sale and purchase are the flip-side of a transaction, the applicability of two provisions on the same transaction may create a lot of doubts.With the introduction of this new section,the taxpayers are thinking that the concept of "Ease of doing business," seems to becoming the "Disease of doing business!"

1. Who is liable to deduct tax under Section 194Q?

The tax shall be deducted under Section 194Q by a buyer carrying on a business whose total sales, gross receipts or turnover from the business exceeds Rs. 10 crores during the financial year immediately preceding the financial year in which such goods are purchased. This provision shall be applicable from 01-07-2021.Thus, the liability to deduct tax under this provision in the financial year 2021-22 shall arise if the turnover of the purchaser was more than Rs. 10 crores in the financial year 2020-21. This section has following important points:

a) There is a purchase of goods from a resident person;

b) Goods are purchased for a value or aggregate of value exceeding Rs. 50 lakhs in any previous year; and

c) The buyer should not be in the list of persons excluded from the provision for deduction of tax.

The tax shall not be deducted under this provision if the tax is deductible or collectible under any other provision except Section 206C(1H). Thus, if a transaction is subject to TCS under Section 206C(1H), the buyer shall have the first obligation to deduct the tax. If he does so, the seller will not have any obligation to collect the tax under Section 206C(1H). Therefore, 194Q overrides 206C (1H). Accordingly, in such case it is TDS that has to be deducted and not TCS.

2. Non applicability of section 194Q

The provisions of section 194Q are not applicable in following cases

(i) Where TDS need to be deducted under any other section then, TDS will not be deducted u/s 194Q and that other section will prevail.

Illustration: Suppose in case of Job Work Purchase, TDS is required to be deducted u/s 194C and side by side conditions of section 194Q also fulfills, then, TDS shall be deducted u/s 194C and not under section 194Q.

(ii) Where TCS charged by the Seller u/s 206C other than section 260C(1H)

Illustration: Suppose we purchased a motor vehicle for Rs. 90 Lac and TCS charged by the Dealer u/s 206C(1F), then no TDS shall be deducted u/s 194Q.

Mr. A purchased alcoholic liquor worth Rs.80 Lakh to be served in his restaurant during the year from XYZ Wines Ltd. Mr. B has a turnover of more than Rs. 10 Crore in the previous FY.

In this case, Mr. A will not be required to deduct tax since Section 194Q is not applicable on transactions where tax is collectible u/s 206C except for sub-section (1H). The seller i.e. XYZ Wines Ltd. will collect tax @1% from Mr. A as per the provisions of 206C (1).

• If a transaction is both within the purview of section 194O as well as section 194Q , tax is required to be deducted under section 194-O and not under section 194Q [ As per CBDT Circular No. 13 of 2021 dated 30/06/2021]
• Section 194Q not to apply on transactions in securities and commodities carried out through recognized stock exchanges or cleared and settled by recognized clearing corporations including those located in IFSC. [ As per CBDT Circular No. 13 of 2021 dated 30/06/2021]
• Section 194Q not to apply on transactions in electricity, renewable energy certificates and energy saving certificates traded through power exchanges. [ As per CBDT Circular No. 13 of 2021 dated 30/06/2021]
• Section 194Q is not applicable in the cases where the seller's income is entirely exempt from Income tax and would apply where seller's income is only partly exempt. Similarly, 206C(1H) would not apply to buyers who are exempt from income-tax. E.g., entities exempt u/s 10 or passed under special laws like RBI Act, ADB Act etc
• Section 194Q not to apply in the year of incorporation of the buyer as buyer is required to have gross receipts or turnover in excess of Rs.10 Cr. in the financial year immediately preceding the financial year in which the transaction takes place [ As per CBDT Circular No. 13 of 2021 dated 30/06/2021]

Note-Where Seller also liable to charge TCS on Sale of Goods u/s 206C(1H).

If Seller is liable to Collect TCS u/s 206C(1H) and buyer is also required to deduct TDS u/s 194Q on the same goods, in such situation question arises that whether Seller will collect TCS or buyer will deduct TDS? So, it is provided that then TDS provision u/s 194Q shall prevail. i.e., in that case, TDS shall be deducted by the buyer and seller shall not charge any TCS u/s 206C(1H).

3. Whether TDS will be deducted on Advance for purchase of Goods?

The answer to this question shall also be in Affirmative. TCS under 206C (1H) is to be collected at the time of receipt of consideration. It is to be noted that in the section the words "paying any sum to any resident for purchase of any goods" are used. There is a difference between the words- "any sum for purchase of goods" and "any sum for goods purchased". The former expression denotes that the purpose of payment is purchase-whether completed or not. The latter expression denotes payment for purchase completed. So, it can be concluded that the provisions of this section may get attracted even in case of advance received for purchase of goods. It is further to be noted that the tax shall be deducted from the purchases made by a buyer at the time of credit of such sum to the account of the seller or at the time of payment thereof by any mode, whichever is earlier. The tax shall be deducted even if the sum is credited to the 'Suspense Account'. It is worth mentioning that Section 194Q provides that TDS is required to be deducted at the time of payment or credit of the purchase value- whichever is earlier.

If purchases had been made before 1st July, 2021 but payment has been made on or after 1st July, 2021 then no TDS is to be deducted on this amount at the time of payment. If payment as an advance had been made before 1st July, 2021 but purchase invoice has been raised by seller on or after 1st July, 2021 then also no TDS is to be deducted on this amount at the time of entry of purchase invoice. CBDT Circular No. 13 of 2021 dated 30/06/2021 has further clarified that Section 194Q will not be applicable to cases where buyer has either credited or paid the amount to the seller before July 01, 2021.

4. At what rate tax is to be deducted?

The tax shall be deducted by the buyer of goods at the rate of 0.1% of the purchase value exceeding Rs. 50 lakhs if the seller has furnished his PAN, otherwise, the tax shall be deducted at the rate of 5%. The applicable rate of 0.1% is subject to fulfillment of conditions mentioned in the newly inserted section 206AB, in the Finance Act, 2021.

5. What are the conditions of section 206AB?

The Finance Act, 2021 has introduced a special provision of TDS in the Income Tax Act, 1961. Section 206AB has been inserted which will be applicable from July 01, 2021.

This new section requires deduction of TDS at the higher rate while making payment to the ‘Specified person’. TDS rates would be higher of the following :

1. At twice the rate specified in the relevant provision of the Act; or
2. At twice the rate or rates in force; or
3. At the rate of 5%

Meaning of Specified person - A specified person is a person who has

(a) not filed the returns of income for both of the immediately preceding two years relevant to the year in which tax is required to be deducted or collected, as the case may be and due date prescribed under Section 139(1) to file such return has expired. AND

(b) whose aggregate of tax deducted at source and tax collected at source in his case is INR 50,000 or more in each of these immediately preceding two years.

However, a specified person shall not include a non-resident who does not have a permanent establishment in India.

This provision is not applicable to deduction of tax at source under –

1. Section 192 - TDS on salary
2. Section 192A - TDS on payment towards accumulated balance due to an employee participating in recognized provident fund ('PF')
3. Section 194B - TDS on income from lottery or crossword puzzle
4. Section 194BB - TDS on income from horse races
5. Section 194LBC - TDS on income in respect of investment in securitization trust
6. Section 194N - TDS on cash withdrawal in excess of INR 20 Lakhs

6. Meaning of Sale

As per Sale of Goods Act, 1930, 'Goods' means every kind of movable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale" Therefore, the tax is to be deducted under this provision from the purchase value of the following:

(a) Movable property;
(b) Any commodity;
(c) Shares or Securities;
(d) Electricity;
(e) Agriculture produce;
(f) Fuel;
(g) Motor vehicle;
(h) Liquor;
(i) Jewellery or bullion;
(j) Art or Drawings;
(k) Sculptures;
(l) Scraps;
(m) Forest produce, etc.

7. Meaning of turnover of the business

Total Turnover, Sales or Gross Receipts means turnover from the sale of goods as well as services provided by the business. Accordingly, if there is sale of scrap the same shall be included for calculating the threshold limit for this section. The turnover needs to be calculated Net of Sale Return and any Trade Discounts being offered as these are directly related to the sales. GST should not be included as a part of Turnover for calculating threshold limit as Income Tax Act has nowhere clarified the same. Going on the concepts that we follow for the applicability 44AB, it is safe to say same could be followed here too. Section 145A begins with "For the purpose of determining the income chargeable under the head "Profits and gains of business or Profession" which makes this provision inapplicable for other purposes as it talks for limited purpose of calculating Income Chargeable.

It is to be noted that the provisions of 194Q are applicable in case of both revenue and capital goods. Immovable property is not "goods". TDS shall be deductible on consideration paid for purchase of immovable property (other than agricultural land) under section 194-IA and not under this section. TDS is deductible under that section if consideration is Rs. 50,00,000 or more. The obligation to deduct tax under this provision arises only when the payment is made to a resident seller. As in the case of import, the seller is a non-resident, the buyer will not have any obligation to deduct tax under this provision. However, the TDS under Section 195 may be required in respect of such transaction

It has been clarified by CBDT Circular No. 13 dated 30/06/2021 that turnover/ Gross receipts of 10 crores of buyer for applicability of this section 194Q will mean Turnover/ Gross receipts in business only. Hence receipts by way of rent, interest, capital gain etc if not considered as business income are not to be included

8. While computing the threshold of Rs. 50 Lakh for FY 2021-22, whether the transactions carried out between April 2021- June 2021 are to be included?

Though the TDS provision on purchase of goods is operative with effect from July 01, 2021, the provision casts an obligation to deduct tax at source when the total purchase during the previous year exceeds by Rs. 50 Lakhs. It has been clarified by CBDT Circular No. 13 of 2021 dated 30/06/2021 that purchases from April 01, 2021 to June 30, 2021 are to be included for the purpose of determination of threshold limit of Rs.50 lacs for the previous year. However, Section 194Q will not be applicable to cases where buyer has either credited or paid the amount to the seller before July 01, 2021

9. Is a buyer importing goods from outside India required to deduct tax at source under this section?

Section 194Q provides that any person, being a buyer who is responsible for paying any sum to any resident, being a seller, is required to deduct tax at source under this provision. Thus, the obligation to deduct tax under this provision arises only when the payment is made to a resident seller.

As in the case of import, the seller is a non-resident, the buyer will not have any obligation to deduct tax under this provision. The buyer may take a declaration regarding the residential status of the seller. However, the TDS under Section 195 or payment of Equalisation Levy may be required in respect of such transaction. In the case of purchase of goods through High Seas sales transaction, this exception may not be applicable as the High seas seller may be a resident.

10. Whether tax is required to be deducted under Section 194Q from the goods exported abroad?

Liability to deduct tax under this provision arises only when the payment is made to a resident seller. Residential status of the buyer, who is making payment, is not relevant under this provision.

As in the transaction of export of goods, the seller is a resident but the buyer is a non-resident. The provisions of section 194Q shall not apply to a non-resident buyer who purchases goods from resident seller in India as it is not effectively connected with the permanent establishment of such non-resident.

11. Securities and Commodities

CBDT vide Circular No. 13 of 2021, clarified that provisions of Section 194Qshall not be applicable in relation to transactions in securities and commodities which are traded through recognized stock exchanges or cleared and settled by the recognized clearing corporation, including recognized stock exchanges or recognized clearing corporations located in International Financial Service Centre (IFSC).

12. Electricity

A transaction in electricity can be undertaken either by way of direct purchase from the company engaged in generation of electricity or through power exchanges. The CBDT vide Circular no. 13 has clarified that the transaction in electricity, renewable energy certificates and energy-saving certificates traded through power exchanges registered under Regulation 21 of the CERC shall be out of the scope of TDS under the provision of Section 194Q.

13. Calculation of Limit of Rs. 50 Lakhs

CBDT vide Circular No. 13, dated 30/06/2021, has clarified that the threshold of Rs. 50 lakhs is with respect to the previous year, calculation of purchases from April 01, 2021 to June 30, 2021 are to be included for the purpose of determination of threshold of Rs.50 lacs for the previous year.

14. Whether TDS to be deducted if the buyer is in service industry and he purchases goods from a seller?

The explanation of section 194Q describes the meaning of buyer. Buyer means a person whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the purchase of goods is made.

Section 2(13) of the Income Tax Act, 1961, contains an inclusive definition of the term "business". "Business includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture." Hence we can infer that business includes services also and if the buyer is a service provider, he has to deduct TDS on purchase of goods, if other conditions are satisfied.

15. Are there any exceptions to this section?

Yes, TDS is not required to be deducted under this section if:

• tax is deductible under any other Section
• tax is collectible under the provisions of Section 206C other than a transaction on which 206C (1H) applies.

So accordingly, TDS liability under this section won’t be triggered if you buy a Car for a value above Rs. 50 Lakhs as TCS would already have been collected from you.

16. Consequences of non-compliance

If buyer fails to deduct and deposit TDS at applicable rates, expenditure to the extent of 30% will be disallowed under Section 40a(ia) of the Act.

17. What if seller has multiple branches?

Needless to say, that the threshold criteria is to be seen PAN wise and not GSTN wise. Also the threshold limit needs to be calculated for each seller each year separately

18. Whether tax is required to be deducted on GST component included in purchase consideration?

There were arguments both in favour and against applicability of TDS on GST component. However, the CBDT Circular No. 13 of 2021 dated 30/06/2021 has clarified thatwherein amount is credited to the seller’s account, and in terms of the agreement / contract between the buyer and seller, the GST component is indicated separately, TDS u/s 194Q is to be deducted on the amount credited without including GST. In case TDS u/s 194Q is to be deducted on payment to the seller, TDS has to be deducted on the whole amount i.e including GST because payment is earlier than credit.

CBDT while issuing clarification in context of section 206C(1H), has stated that since levy of TCS is on receipt of sales ‘consideration’ there should not be any adjustment on account of any indirect taxes. In case of section 194Q, tax is required to be deducted on sum payable to resident being value for purchase of goods and hence, applying the clarification by circular no. 13, TDS will not be deducted on GST component included in value of invoice.

19. Purchase & Sale from the same party (Barter system)

TDS liability will be there even if the buyer is not making any payment against its purchase but adjusting the amount against its sale to the same party.

20. Loading / Unloading, Freight, Insurance, etc

If these amounts are reflected on the invoice then it may be considered as part of purchase value and may accordingly be liable for TDS. The amount of GST is not liable for TDS U/s 194Q.

21. Impact of Credit/Debit Notes

a) A buyer has purchased a goods of Rs. 60 lakh and the amount is settled for Rs. 55 Lakh by issuing a debit note of Rs. 5 Lakh. TDS liability gets triggered at the time of payment or debit whichever is earlier & so the moment Rs. 60 Lakh is credited to the account of the seller, TDS liability is attracted. The reversal of TDS on Rs. 5 Lakhs may be adjusted in next purchase from buyer.

TDS u/s 194Q is made at the time of payment or credit whichever is earlier. Therefore, tax would have been already deducted on purchase return. In such case if the money is refunded by the seller or the credit note is issued by the seller, then the amount of TDS deducted may be adjusted against next purchase from the same seller. No adjustment will be required if the purchase return is replaced by goods, by the seller. [CBDT Circular No. 13 dated 30/06/2021]

b) If the discount is given in the bill itself, then the TDS would be required on an amount after discount only.

22. Whether a seller of goods can apply for lower / non-deduction certificate from tax authorities?

The provisions of section 197 empower the assessing officer to grant certificate to the recipient of income for non-deduction / deduction at a rate lower than specified rate of TDS. However, such provision is yet not made applicable to TDS on purchase of goods under section 194Q. Hence, the seller of goods would not be eligible for such benefit.

23.Working of Section 194Q We can explain the provisions and their applicability with help of following case studies

Example:

24. Interplay between Section 206C(1H) and Section 194Q

Second Proviso to Section 206C(1H) provides that if the buyer is liable to deduct tax under any other provision on the goods purchased by him from the seller and has deducted such amount, no tax shall be collected on the same transaction. Section 194Q(5) provides that no tax is required to be deducted by a person under this provision if tax is deductible under any other provision or tax is collectable under section 206C [other than a transaction on which tax is collectable under Section 206C(1H).

Though Section 206C(1H) excludes a transaction on which tax is actually deducted under any other provision(which will cover Section 194Q as well), but Section 194Q(5) does not create a similar exception for a transaction on which tax is collectible under Section 206C(1H). Thus, the buyer shall have the primary and foremost obligation to deduct the tax and no tax shall be collected on such transaction under Section 206C(1H). However, if the buyer makes a default, the liability to collect the tax gets shifted to the seller. The provisions of sec 194Q and sec 206C(1H) can be understood with the help of the following comparative study. It has been clarified by Circular No. 13 dated 30/06/2021 that once the buyer has deducted the tax on a transaction, the seller is not required to collect the tax u/s 206C(1H) on the same transaction. If, for any reason, tax has been collected by the seller u/s 206C(1H), before the buyer could deduct tax under section 194-Q on the same transaction, such transaction would not be subjected to tax deduction again by the buyer. The circular has also clarified the hierarchy of section 194-O, 194Q and Section 206C(1H). If section 194-O is applicable to a transaction then 194Q and 206C(1H) will not apply. If 194Q is applicable then section 206C(1H) shall not be applicable. If section 194-O and 194Q are not applicable section 206C(1H) will be applicable

Example:

ABC & CO. sold goods to PQ Limited for Rs. 20 lakhs on 05.05.2021, Rs. 25 lakhs on 31.07.2021 and Rs. 10 lakhs on 01.10.2021.PQ Limited has paid the entire amount i.e. Rs. 55 lakhs on 01.02.2022.

Comparison of Sec 194Q and 206C(1H) of Income Tax Act, 1961

194Q: PAN of seller available- Rate: 0.1%, PAN of seller not available- Rate: 5%

206C(1H): PAN/ AADHAAR of buyer available – Rate: 0.1%, PAN of buyer not available- Rate: 1

25. After introduction of section 194Q, whether section 206C(1H) would be redundant?

For applicability of TCS U/s 206C(1H), turnover of the seller would be relevant whereas for TDS U/s 194Q, the turnover of the buyer would be relevant. Introduction of section 194Q doesn’t make section 206C(1H)redundant. It may happen that the turnover of the buyer is less than Rs. 10 Cr and so the buyer may not be deducting TDS u/s 194Q and as a result seller would be required to collect TCS U/s 206C(1H).In case of interplay of sec. 194Q and sec.206C(1H),we have to see the provisions of section 194Q.

As per sec 194Q(5),the provisions of this section shall not apply to a transaction on which –

(a) tax is deductible under any of the provisions of this Act; And

(b) tax is collectible under the provisions of section 206C other than a transaction to which sub-section (1H) of section 206C applies.

Now it is clear from the above that there is no exemption from TDS if the TCS is collectable under Section 206C(1H) i.e., TCS on sales of goods. If TCS is collectable under any other sub section of section 206(C) "except 206C(1H)"then the TDS under this section is not applicable. Hence it is clear that there is an exception of this exemption and which is lying in section 206C(1H) and this section relates to TCS on sale of Goods.It has been clarified by CBDT Circular 13/2021 that if, for any reason, tax has been collected by the seller u/s 206C(1H), before the buyer could deduct tax under section 194-Q on the same transaction, such transaction would not be subjected to tax deduction again by the buyer.

Now take a look at the answer to the question which has been given in the proviso in section 206C(1H) which reads as" 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."

Hence when TDS provisions on purchase of Goods are applicable on purchaser then TCS provisions on the same transaction is not applicable on seller it means where Section 194Q is applicable then there is an exemption from section 206C(1H).In such a situation, one problem may be there because the additional words "has deducted such amount" added to the words "buyer is liable to deduct tax" hence the actual exemption from TCS is dependent not only on liability of purchaser for deduction of TDS but on "actual deduction of TDS". This is somewhat a strange position of Law but practically problem can be resolved with better communication and coordination with the purchaser.

Suggested draft of letters/ declarations to be issued or to be given by each assessee have been prepared and same are attached herewith as per details given below:-

• Draft of letter to be issued to buyers asking them if their turnover in FY 2020-21 has been more than Rs.10 Crores and tax is deductible by them under section 194Q of the Act from payments of purchase consideration to be made by them exceeding Rs. 50 lacs, so that tax is not collected under section 206C(1H) of the Act. Draft of declaration to be given by buyers is also being given. (Annexure-A)

• Letter to be issued to venders / suppliers / sellers for the purpose of applicability of provisions of Sections 194Q and stating that tax will be deducted under above section and therefore, no action be taken by them under section 206C(1H) of the Act, if applicable to them. Draft of declaration to be given by venders/ supplier/ sellers is also being given. (Annexure-B)

Annexure - A

(On the Letterhead of Seller)
Date: 1st June, 2021

Buyer,
Address

Dear Sir / Madam,

We, ________________________, having PAN ______________ hereby inform you that our total sales, gross receipts, or turnover from Business during FY 2020-21 has been more than Rs.10 Crore. Therefore, provisions of Section 206C(1H) are applicable for the purpose of collection of tax at source on receipt of sale consideration of goods purchased by you from our company during the current financial year on the amount exceeding Rs.50 lacs. In relation to compliance with above provisions we require following information / declaration from you: -

1. Section 194Q has been inserted in the Income Tax Act vide Finance Act 2021 with effect from 01.07.2021. As per above Section tax is required to be deducted at source from purchase consideration paid / credited on or after 01.07.2021 by you against purchases made from us, in case your total turnover during financial year 2020-21 has been more than Rs.10 Crores. In case you are liable to deduct tax under section 194Q of the Act, tax will not be collectible by our company under section 206C(1H) of the Act w.e.f. 01.07.2021. Please confirm that you are liable to deduct tax at source under section 194Q of the Act from payment of purchase consideration to be made / credited to us. On receipt of above confirmation, we will not be taking any action for collection of tax at source as per section 206C(1H) of the Act, otherwise we will be collecting tax from you as per above Section.
2. You are also requested to intimate to us your Permanent Account Number. In case you fail to provide your PAN, tax will be deducted at the rate of 1 percent instead of 0.1 percent in terms of Section 206CC of the Act.
3. Further, you are also required to confirm that in your case amount of TDS/TCS was Rs.50,000/- or more in previous years relevant to Assessment Years 2019-20 and 2020-20 and you have filed your returns of income for these assessment years. Please also provide acknowledgement numbers for filing the same, otherwise tax is required to be deducted at the rate of 5 percent in terms of Section 206CCA of the Act.

You may send to us your declaration in the enclosed draft on or before 15.06.2021 to enable us to take note of same and modify our accounting software accordingly. In case your declaration is not received by us by the above date, we will modify our software to collect tax at the rate of 5 percent and it would be difficult for us to take corrective action to reduce the rate during the current financial year.

For______________Ltd.

Authorised Signatory

Annexure - B

(On the Letterhead of Buyer)

Date: 1^st June, 2021

To,

<Supplier’s Name>