TDS Applicability on Electricity Charges U/s 194Q
This query is : Resolved
24 March 2022
Sir,
Can you please clarify regarding the TDS Applicability under section 194Q in case electricity payments. I have currently received letter form the electricity board to deduct TDS if the total charges exceeds the threshold limit.
Our company have five branches and electricity liability for the financial year 2021-22 well exceeds the threshold limit of Rs. 50,00,000. But all the branched have rented building and electricity bill was in the name of building owner. Then I want to know whether the company was liable to deducted TDS?
Can you please clarify regarding the TDS Applicability under section 194Q in case electricity payments. I have currently received letter form the electricity board to deduct TDS if the total charges exceeds the threshold limit.
Our company have five branches and electricity liability for the financial year 2021-22 well exceeds the threshold limit of Rs. 50,00,000. But all the branched have rented building and electricity bill was in the name of building owner. Then I want to know whether the company was liable to deducted TDS?
24 March 2022
Please note that as per Circular Number 13/2021 provisions of section 194Q are not applicable on Transaction in 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.
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24 March 2022
Yes in my opinion also, no need to deduct TDS on electricity charges u/s 194Q.
Refer to CBDT guideliness on 194Q - Circular No. 13 of 2021-Income Tax Dated: 30/06/2021
Refer to CBDT guideliness on 194Q - Circular No. 13 of 2021-Income Tax Dated: 30/06/2021
01 November 2022
TDS u/s194Q is applicable in case of electricity charges. CBDT circular clarifies in respect of electricity purchased through 'Power exchange' only and not otherwise.
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08 September 2023
Honourable Supreme Court in the case of State of A. P. v. National Thermal Power Corporation Ltd. (2002) 5 SCC 203/ 127 STC 280 (SC) has held that Electricity is Goods. Once it is goods provisioons of section 194Q and s. 206C(1H) would be attracted as the case may be having regard to turnover of assesse and amount of electricity purchase / sale. If the turnover of the assessee is less than 10 cr but payment or electricity purchase is more than 50 lacs in a year then the electricity company shall make TCS.
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