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TDS on Purchase of Goods | New Section 194Q in Income Tax applicable from 1. July 2021
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- Äas pĆidĂĄn 5. 08. 2024
- đIn this session we are going to discuss the newly inserted section 194Q in Income Tax Act,1961.
đClause 48 of Finance Bill 2021- Insertion of new section 194Q-
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 50 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 (5% if PAN is not provided) of such sum exceeding fifty lakh rupees as income-tax.
đ Memorandum Explaining Sec 194Q
Chapter XVIIB of the Act relates to deduction of tax at source. The provisions of this chapter provide for TDS on various payments at rates contained therein. It is proposed to provide for TDS by person responsible for paying any sum to any resident for purchase of goods. The rate of TDS is kept very low at 0.1%. To ensure that compliance burden is only on those who can comply with it, it is proposed that the tax is only required to be deducted by those person (i.e. âbuyer) 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. Central Government is proposed to be empowered by notification in the Official Gazette to exempt a person from obligation under this section on fulfilment of conditions as may be specified in that notification. Tax is required to be deducted by such person, if the purchase of goods by him from the seller is of the value or aggregate of such value exceeding fifty lakh rupees in the previous year. It is also proposed to provide that the provisions of this section shall not apply to, -
(I) a transaction on which tax is deductible under any provision of the Act; and
(ii) a transaction, on which tax is collectible under the provisions of section 206C other than transaction to which sub-section (1H) of section 206C applies. This means, if on a transaction a TDS or tax collection at source (TCS) is required to be carried out under any other provision, then it would not be subjected to TDS under this section. There is one exception to this general rule. If on a transaction TCS is required under sub-section (1H) of section 206C as well as TDS under this section, then on that transaction only TDS under this section shall be carried out. Board with the approval of the Central Government has been empowered to issue guidelines for removing difficulty in giving effect to the provisions of this section.
đ Practical FAQ
đ€ Date from which this section applicable?
Sec 194Q is applicable from 1. July 2021.
đ€ What if, seller is liable to collect TCS under sec 206C(1H) and buyer is liable to deduct TDS under sec 194Q?
Sec 194Q shall override sec 206C(1H) and hence in such a case only buyer is need to deduct TDS and seller need not to required deduct TDS under sec 206C(1H).
đ€ What is point of taxation arises under sec 194Q?
When buyer credit the sum to the account of seller or payment, whichever is earlier.
đ€ Purchasing Limit for 50Lakhs to be check from 1April,2021 or 1 July,2021?
For purchasing limit of Rs. 50 Lakhs Sec 194Q clearly mentioned PREVIOUS YEAR, hence purchasing limit of Rs. 50Lakhs to be consider from 1 April,2021 and not from 1 July,2021.
đ€ If Purchase amount exceed 50 Lakhs, then TDS to be calculate on complete amount or amount exceeding 50 Lakhs.
For Example, Mr. Buyer buy goods from Mr. Seller amounting Rs. 85 Lakhs and he is liable to deduct TDS under sec 194Q. Now in this case TDS to be deduct on Rs. 35 Lakhs (85-50 Lakhs) @ 0.1%
đ€ Buyer turnover Limit of Rs. 10 Crore to be check for which FY?
Buyer turnover Limit of Rs. 10 Crore to be check for the FY 2020-21
đ€ TDS to be deducted on Total Invoice Value or Taxable Value (before GST)?
CBDT has clarified through Circular No. 23/2017 that if GST on services has been indicated separately in the invoice, then no tax would be deducted on GST component. However, whether this benefit will be extended to GST on services is need to clarify by the CBDT. Hence will update this point as soon as CBDT issue any notification or circular.
đ€ Due date of payment of TDS-
7th of following month
đ€ TDS Return-
Form 26Q to be revise to incorporate this section and return to be file quarterly.
đDownload Notes - bit.ly/3pTs5dd
Cheers Folksđ
Team Fintaxpro
đ©Personal Consultancy - teamfintaxpro@gmail.com
đ +91 97180 97735 (CA Rajat Garg, Partner Fintaxpro Advisory LLP)
â°Time Stamp
0:00 Intro to Topic
1:08 Sec 206C(1H) TCS on sales of Goods
1:38 Sec 194Q TDS on Purchase of Goods
5:43 Memorandum Explaining Sec 194Q
8:26 Sec 194Q shall override Sec 206C(1H)
9:42 Practical Aspect of Sec 194Q
23:03 Outro
No one can explain better than this.... Thank you
đDownload our Analysis of Sec 194Q - bit.ly/3pTs5dd
đšđ»âđEnroll to our practical course in TDS, ITR & GST Filing
đEnrollment Link - bit.ly/3uENoRn
For any Query please connect to us at
For Taxation matter & Consultancy - đ 9718097735 (CA Rajat Garg)
đ©info@fintaxpro.in
www.fintaxpro.in
-Team Fintaxpro
I appreciate the detailing and every minute angle covered by you..
Glad you like it
Your background is always aswome sir... great job.
Very well explained with lot of enthusiasm
Glad you like it. Appreciate your support Ma'am đ
It means both 194 Q and 206H section are existing,
we to collect the TCS and deduct it also if applicable.
E.g seller and buyer both have more than 10 cr. Turnover.
Seller is selling goods for 80 lakhs, then seller has to collect TCS and buyer has to deduct TCS.
No, only 194Q will be applicable in this case and buyer need to collect TDS on such transaction
For fy 20-21 sec 194Q was not applicable as my turnover for fy 19-20 does not exceed 10 cr,but my purchase exceeded 50 lac.For fy 21-22 sec 194 Q is applicable as turnover in fy 20-21 exceed 10 cr.now my confusion is how to calculate turnover limit of 50 lacs as TDS is on exceeding 50 lac,from which date I should calculate turnover of 50 lac,from fy 21-22(1-04-2021) or I should I consider on all purchase before 1-4-2021 for calculating 50 lac
Sir appreciate u for clear the concepts
Glad you like it
Thanks sir ji
Informative Video Sir. Thanks a lot. A lot of clarification done for 194Q.
But one thing please answer.
If before 1 July 2021, total goods purchased from a party for rs 80 Lac. And payment is made 80 Lac. Without taking this provision. So now is TDS to be deducted under excess 30Lakh. Or now TDS is applicable on fresh purchases done after 1 July 2021.
How to calculate TDS in the case of a Petroleum dealer who pays amounts regularly to OMC ( like BPCL, HPCL etc.,). Should TDS be deducted on every payment above Rs.50 lakhs in the year. Say they pay Rs.75 lakhs now and Rs. 20 lakhs later in the year. How to calculate TDS. Please explain. Thanks in advance.
Great detailing
Sir very nice videos thankyou so much
Nice video thanks sir
Wow Great you are awesome Vivek Sir.
Very informative thank you
Always welcome
Thanks for briefly explain
Glad it help
Why for TCS return date for O4 2020_21 not extended . Govt want to implement various changes from time to time . But not look into assessee point of view ,how they are penalised for wrong policy decisions . If TDS return and GST return date was extended one after another . Why not the TCS return date sir .
Whether we have to deduct TDS on every invoice if our turnover is above 10 cr and purchase from buyer above 50 lakh in previous year?
An assessee is trading in building material like sand, cement etc. and selling these items to local authority i.e. Gram Panchayat.
Is this sale will attract GST ??? If yes, then how GST on this transaction will be calculated and collected for payment??
Agr kisi f.y. me hum payment pr tds kat rhe starting se, but in the end of f.y. purchase payment se extra ho jati h uss case me kya krna hoga?
Dear Sir : Please let me know if Sec 194Q is applicable to Foreign companies being a buyer ?
Sir, factory me shed construction ka kam chal raha hai to kya us k uper ITC claim kar sakte hai??? Yes or no????
Please give ans with reason..
Thanks...
Thank you sir
Very well explained with PPT..
Glad you like it
Excellent Sir
What if in a purchase there is transportation like service amount is included and we are paying tds on that service amount and if not paying tds on that service amount, how 194q apply..
Sir is this section 194q applicable to Local Authority as a deductor?
Is it applicable on sale of residential property also pls clarify regards
Sir ek Query Bata sakte hai kya?
194Q me mene DGVCL ka TDS kata or jo Invoice aaya tha usme TDS kata ke payment kiya but next bill aaya to TDS ka amount outstanding tha
Excellent presentation đ
Glad you like it
Sir can u please clarify my doubt..
Letâs consider 3 persons A,B,C
A is seller of goods to B. B is buyer of goods from A and C is the ultimate buyer from B
1.If B turnover in 2020-21 is more than 10 Cr and purchased above 50 lakhs from A in Fy 2021-22 then as u said 194 Q is applicable but now if B is selling to C and C turnover is less than 10 Cr in 2020-21 then C cannot deduct TDS u/s 194Q now is it necessary for B to collect TCS u/s 206C(1H)?
Salary bank account deposit withdrawal limit Kitano hai
One doubt related to 194Q, If turnover in FY 21-22 exceeds 10cr, So In FY 22-23 we have deduct tds under 194q on purchase of goods. But a particular Seller he still deducting TCS under 206C(1h) on the same transactions. So are we required to deduct TDS on same transaction. if We don't deduct tds on same transaction and tcs in deducted by seller. What are the consequences for the same. 50 lakh limit already crossed in month of april only
50lakh limit is inclusive of GST, insurance, freight, packing forward charge or only total amount of taxable value during the period
No consider only Taxable value
Sir Mind Blowing...Tq.
Glad you like it đ
Itna cute CA ...đ¶âđ«ïž....thanks for ur valuable Gyan with cuteness đ
What if buyer starts Business in current year and duing current year turn over cross the 10cr limit as well he buys the goods from particular party also exceeds 50 lakhs ?? So Section 194 q will attract or not ???
sir.what is defination of goods as per this section.which goods are covered.can u make video on applicability of tds on purchase of fixed assets
Whether this is applicable for trust? Please reply. Thank you
For 94Q Sir 50 lakh ka t/o w/o gst vali amt. Ka dekhna hai na or 0.1% ka tds bhi w/o gst vadi amt pe cut hoga na
Sir mere ek company hai mere company ka 1st year tha fy 21-22 ka to Tds 194q application nhi tha an mere turnover 40 crore h to applicable h me ye puchna chaa rha hu ki Tds 194 q kse lgega 50 lakh ki limit new year se dekhu ya pichle sall ki purchase consider kru 50 lakh k liy ya new year me 50 lakh ki limit check kru
in the rpu 194 q act under section in which category
Sir Mera abhi ek bankse TDS deducted horaha hai toh Mera aur ek new bankse withdraw Kiya toh TDS deduct hoga kya?
sir 194q ka kis head of income me refund claim hota hai
Sir , if purchasing amount of exceed 50 lac in F.y 2022-23 then TDS will be deduct but next F.y seller amount does not exceed 50 lac then TDS will be deduct or not ? Please tell me Sir.
Sir I purchased from A of 70 lacs in fy 21-22 so I will deduct tds, but i purchased from A of 15 lacs in fy 22-23 ,
Will I tds deduct of A in fy 22-23?
Sir 194q calculate after discount or before sir kindly reply me
sir, if we purchase goods 05.05.2023 , then we have to check turnover for 2021-22. Am i right sir . Plz guide.
Thank you sir. Very nicely explained. Secondly, thanks for the pdf file which you have shared with us. Appreciate it.
Glad it help
Sir we are doing job work business we raised sales invoice in that can we deduct tcs...pls tell me sir
Well explain bro
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THANK YOU VERY MUCH SIR FOR THIS VIDEO. BUT I HAVE ONE QUESTION IF PURCHASE IS MORE THAN 50LAKHS ON BEFORE 01.07.2021 THEN WE NEED TO COLLECT TDS ON THAT AMOUNT ALSO. AWAITING FOR YOU REPLY SIR. MEANS PURCHASE GOODS BEFOR 01.07.2021 70LAKHS THEN WE NEED TO DEDUCT TDS ON 20LAKHS
No because section application from 1.June.2021 so there is no taxability before that.
@@FinTaxPro Thank you
Thank you very much
Tds on taxable value is correct
Yes
@@FinTaxPro tds deduct on taxable value. But kaise proof kre ..koi notification hai kya ..
@@SunilSingh-er2lo Yes CBDT has issued circular no 13 of 2021 dated 31st July 2021, where it is clearly specified that TDS under Sec 194Q shall be deducted on taxable value.
We have made a complete vide on that please refer this video.
czcams.com/video/Qb99IRNn6QY/video.html
@@FinTaxPro thanks sir
Sir/Ma'am,
There are many videos on 194Q and 206C 1H on you tube but every has different opinions and my confusions are as below.
1. 50 lakh limit is through total invoice value or Basic value of Purchase or Sale for both sections?
2. Goods means only Traded goods or including Capital goods also for both sections?
Here are answers
1. Sec 206C(1H) we need to consider invoice value and under 194Q we need to consider taxable value
2. There is no clarification on this point so its better to take a broader approach and take capital good as well.
@@FinTaxPro
Thank you Sir for your valuable reply đđ
Well explain đ
Glad you like it
Is there any special exemption to purchases from farmers or market committee?
Not in this section
Dear sir, I am requested you to kindly give me positive answer below mentioned query:-
M/s Orbit Power System partnership firm h, iski turnover F.Y. 2019-20 m less then one crore thee, lekin F.Y. 2020-21 m turnover three crore h(up to January 2021). Jisme se 2.2 crore ki sale ek hi person ke sath h, to kya orbit Power system under section 206C (1H) TCS deduct krne ke liye liable h ya nhi, sir pls give me reply đđđ
No because as per Sec 206C(1H) seller turnover should exceed 10 crore in last year and since your turnover is under the limit hence you are not liable to collect TCS under sec 206C(1H)
Hope it helps
- Team FinTaxPro
if a buyer purchase in a month of february and makes payment on 1st july 2021 can be tds applied?
No
If a person not deduct tcs as per provision 206(c)(1h) then 30%amount will be disallow in tax audit or not?
No because under the concept of TCS assessee is not claiming expenses rather need to collect TCS on sale so there is no point of disallowance u/s 40(a)(ia).
Hope it is clear now.
Vivek Bhaiya It is Clearly written in the Memorandum that, A buyer responsible for making payment to a resident seller for purchase of goods is liable
to deduct TDS when the value or aggregate value of goods purchased in previous year
exceeds Rs 50 Lac
please Clear whether it is PREVIOUS YEAR OR CURRENT FINANCIAL YEAR .???
In income tax previous year means financial year
@@FinTaxPro sir is it fy 20-21 or 21-22
And which need consider Rs 50 lac fy 20-21 or fy21-22 April to June
Plz clarify
Wow â€ïž
SIR PLEASE TELL HOW TO CALCULATE BUYERS TURNOVER IT INCLUDES SALE+ GST AUR ONLY SALES
URGENT REPLY REQUIRED
Only Taxable value excluding GST
Good speaking
TO limit of 10 cr should be considered with GST or without GST?
Without GST
Income tax course ki fees kitani hai
Tds deduct kb hoga , purchase krenege tb ya payment ke time, means only purchase of 80lakh but payment pending so tds deducted or not
When seller credit in books or payment, whichever is earlier
Sir 194q m gst v ayega kya??
đ very nice sirđ
Glad it helps
Very nice Vivek
Thanks ji
SIR,
TDS Applicable on Invoice Value Or Taxable Value?
Taxable Value
Sir Main R K Tiwari
Main ek company me accounts department me work kerta hooo
Mera question aap se ye hai
Mere company last year 10 caror se above turnover hai
Mere yeha steel authority se purchase hota h jiska amount 1.5 caror h 26-06-2021 tk kya ham 1 caror pr TDs jama kerna hoga
Hamre yeha april month me hi 50 laks se upar purchase hogaya h
Nahi July m jo ourchase hogi uspe TDS deduct karna hoga aapko
it s nice
Thanks Vishal
HELLO SIR, OUR COMPANY TURNOVER OF RS 9.50 CR IN LAST YEAR 2020-2021, I HAVE 3 MAIN PARTY FOR PURCHASING OF GOODS MORE THAN 1 CR. MY QUESTION IS IN THIS SITUTION 194Q APPLICABLE FOR ME?
No ,as your turnover is less than 10 Cr in previous year.
Regards,
-Team Fintaxpro
No.... Previous Year turnover doesn't cross 10 crore
Sir If sellers mention TCS on his bill. But 194Q will override that. So we'll deduct TDS on that purchase. But phir jo TCS seller ke invoice me mention hai uska kya hoga. Uski entry kaise hogi .
Please reply.
Ask seller to revise the invoice as you are liable to deduct TDS.
What is the Interest rate if payment done after due date i e 7th ?
1.5% per month
sir/mem hmlog jise buy karte ha woh tcs lagake bill deta ha and hmlog vi tcs laga ke bechta ha jiska 50lac ke upr ha woh
and mujhe yeh janana ha ki 1st july 21 se hmko ka tds on purchase lagega ki nhi?????
agr lagega to ek transaction me dono use ho jaiga tcs nd tds woh to galat hoga
Jo aapko TCS laga k bill dete hai unko mail daal k boliye ki aapke uper TDS 194Q applicable h to unko TCS lagane ki requirement nahi h
Baki aap jo sale karte hai unse confirm kar lijiye agar unke uper TDS 194Q lagta hai to aapko unse TCS collect karne ki requirement nahi h
How buyer will know the turnover of seller and vice versa because we have more than 500 sellers and more than 2000 buyers. Will we contact each to know their turnover whether exceeds 10 crore or not ?
You can check it in your account software.
@@FinTaxPro Sir, the turnover of our buyer will be reflected only in the books of buyer, not in our book. In our book , we can know the total transaction with that particular buyer.
Is it applicalbe in vat items like petrol
Yes
sir mere pass 1 invoice hai joh 70 lakh ka hai..issme 15 lakh ke services hai jisme 194c ya 194j me TDS kaat liya toh goods joh bacha 55 lakh ka ussme 194Q lagega ke nhi..?
Yes lagega
@@FinTaxPro Thanku Sir for clarity đ And i appreciate your super fast reply đđ»
If goods value is 55 lacs, discount given 6 lacs,. Amount payable 49lacs. Now what will we consider? 55 or 49
49 Lakh
Thank you sir
There is a doubt.
If a seller doesn't have 10 cr turnover in P.Y.as well as in C.Y. but have purchase exceeding 50 lac from single seller.
Is Sec.194 Q applicable to him?
No
@@FinTaxPro Thanx
Sir how to claim that tds deduct ...? Please provide a video of claiminh that?
You can claim TDS while filing ITR
Sir if u minutely read sec 194Q (5) (b) in the finance bill it clearly says that sec 194Q shall not apply to a transaction on which tax is collectible u/s 206C other than 206C(1H) .
So in a way,the interpretation comes out that TDS U/s 194Q is still applicable even on transaction on which TCS is collectible by seller under 206C(1H) . Sec 194Q(5)(a)/(b) excludes only those transaction on which either TDS under any other section is deductible or TCS is collectible u/s 206C other than 206C(1H).
The memorandum explaining the Finance bill also reiterates the same law initially. But it has clarified the same as an exception saying only TDS U/S 194Q shall be applicable and not both TDS u/s 194Q and TCS u/s 206C(1H).
So there appears to be a anomaly still exists in the drafting of law in the finance bill. Govt should clear this confusion and come out with clarity along with guidelines for its applicability.
Dear to understand 194(5)(b) we also read its corresponding section 206C(1H)
Sec 206C(1H) clearly says that if TDS is deducted under the provision of TDS then sec 206C(1H) shall not apply .
Now reading the same with 194Q, it is quite clear that when there is any contradiction in these two sections, then 194Q shall prevail. The same point is also clerify in memo to Finance bill.
Hence as per our point of view it is quite clear that 194Q is override section.
However lets wait for hope CBDT will clarify this cause with some FAQ.
@@FinTaxPro That's true. It's always better to have applicability of only one either TDS194Q or TCS 206C(1H) but not both and TDS is more preferable than TCS. Also applicability of 44IA appears to be draconian as it disĂ llows 30% of the expenses 25% of 15lakh I. e 375000 just for 5000.Govt should relax this.
@@snehasishmohapatra7370 correct :)
I think in journal entry of your PDF, you have calculated tds on wrong amount.
TDS should be deducted of such sum exceeding 50 lakhs, right ?
50 lakh*0.1% = 5000
Correct me, if I am wrong.
If it is the first transaction after 1st July 2021 than you are perfectly correct after.
@@FinTaxPro Thanks, more clear now.
đđ»đđ»đđ»đđ»đđ»đđ»đŻđŻđŻđŻ
is it applicable on diesel also
Yes
best
Glad you like it đ
Ten crore turnover with tax or without tax turnover
Turnover means sales value exclusive tax.
50 lakh amount shud be from april 21 to june 21 or in particular month July 21? Pls reply
From April 21
@@FinTaxPro thank you
@@FinTaxPro but Tcs has been already deducted by the party in the month april may and june 2021, still we have to deducted tds on the same month and consider it?
How to deal in case where there is purchase returns??
If in current month TDS can be adjust ,but if already paid to government then cannot be adjust.
@@FinTaxPro can u make video with example to make it more clear?
Hello sir, my company turnover is 12crore but there is no 50lakhs purchase from even single member will this section applies on my company
Yes this section application on you as turnover exceed the threshold limit of 10Cr. However you did not need to deduct TDS of suppliers.
Regards,
-Team Fintaxpro
@@FinTaxPro Thank you sir ji
If peoples wants free ratio , vaccine, tax to dena hi parega.
Bilkul
Sir, in your second example, the TDS amount should have been 5000 instead of 10000, considering 0.1% over and above the threshold limit of 50L. Please clarify if I have missed something
Will check and confirm :)
Big fish traders transfer all tax to consumers. It means 1% goods will be dearer
All videos most in most
Baapre
Sir ji phir toh tcs ka section remove hi kr dena chaiye law m s
Sir Ji phir toh tcs deduct krne ki liability remove hi ho gyi sabki is section k ane k baad koi bhi tcs nhi deduct krega sale p
Nahi esa nahi hai agar buyer k upper TDS nahi lagega tab TCS collect karega seller