194Q reportiing on form 26AS

(b) Rs. 10 lakhs                    

Thank you.

This 194Q transaction is for sale of artwork held for longer than 3 years. Seller should be able to report any gains after deducting the acquistion cost of artwork as long term capital gain, correct ?

Yes, provided you are not doing its business.

Thank you, Dhirajlal. The seller is individual art collector and not a business in art field. However the buyer happens to be art gallery doing art buying/selling business.

Though there may arise a query by ITD over seller. but it can be reply with evidences.

Section 194Q applies to buyers who: 

• Had a turnover, gross receipt, or sales exceeding Rs 10 crore in the previous financial year, and
• Are responsible for making payments to a resident seller, and
• Make payments for goods worth/totaling over Rs 50 lakh

Example

If a buyer had a turnover above Rs 10 crore in FY ending March 31, 2022, they must deduct TDS from their resident seller for goods purchases above Rs 50 lakh in FY 2022-23.

https://database.taxsutra.com/articles/9a202f9463df3658d69522b25b972e/expert_article

Dhirajlal, one more clarification as this 194Q is a bit complicated. Going back to my very first post....The seller will report this 194Q transaction as capital gain on ITR2. That part is clear.

When we look at ITR2, towards the end there is a section called "DETAILS OF TAX DEDUCTED AT SOURCE (TDS) ON INCOME". 

In that table how should this tranaction be reported ? I have two specific queries about how to report this 194Q in this particular table

• What should be Gross Amount (11)  ?
  • (a) Rs. 10 lakhs ? (as reported on 26AS) or
  • (b) Rs. 60 lakhs ? ( 10 lakhs from 26AS + 50 lakhs)

• What should be Head of Income (12) ?
  • (a) Income from other sources or
  • (b) Income from capital gains ?

1. Seller will report through TDS return which will get reflected in your form 26AS & AIS report. The same will get prefilled in Schedule TDS of ITR.
2. You will report 60 lakhs as gross sell amount in Schedule capital gains.

(2) is clear. You are right. 60,00,000 will get reported as gross sell amount in Schedule Capital Gains. No questions there.

But need clarity on (1).

• You are correct, my (seller's) 26AS and AIS show Total Amount Paid / Credited: 10,00,000 Tax Deducted: 1,000, Tax Deposited: 1,000. Where I need clarity is how the Schedule TDS should look like.
  • Should it be left as prefilled
    • Gross Amount: 10,00,000
    • Head of Income: Income from Other Sources
  • Or Should I update Schedule TDS in any fashion. For example
    • Change Gross Amount to -  60,00,000 (to match schedule capital gain) ?
    • Change Head of Income to - Income from Capital Gains (since I am reporting this transaction on Schedule Capital Gains) ?

Kindly refer to the attached screen shots of Schedule TDS from ITR2.