{"id":14536,"date":"2025-01-23T14:51:00","date_gmt":"2025-01-23T09:21:00","guid":{"rendered":"https:\/\/rtiwala.com\/content\/?p=14536"},"modified":"2025-01-23T14:51:01","modified_gmt":"2025-01-23T09:21:01","slug":"section-194q-of-income-tax-act-tds-on-goods-purchases","status":"publish","type":"post","link":"https:\/\/rtiwala.com\/content\/section-194q-of-income-tax-act-tds-on-goods-purchases\/","title":{"rendered":"Section 194Q of Income Tax Act: TDS on Goods Purchases"},"content":{"rendered":"<nav class=\"wp-block-wpseopress-table-of-contents\"><ol><li><a href=\"#introduction\">Introduction<\/a><\/li><li><a href=\"#key-provisions-of-section-194q\">Key Provisions of Section 194Q<\/a><\/li><li><a href=\"#objectives-of-section-194q\">Objectives of Section 194Q<\/a><\/li><li><a href=\"#detailed-example-of-tds-under-section-194q\">Detailed Example of TDS Under Section 194Q<\/a><\/li><li><a href=\"#buyers-responsibilities-under-section-194q\">Buyer\u2019s Responsibilities Under Section 194Q<\/a><\/li><li><a href=\"#implications-for-sellers\">Implications for Sellers<\/a><\/li><li><a href=\"#comparison-between-section-194q-and-section-206c1h\">Comparison Between Section 194Q and Section 206C(1H)<\/a><\/li><li><a href=\"#challenges-and-concerns\">Challenges and Concerns<\/a><\/li><li><a href=\"#role-of-rti-in-section-194q-related-queries\">Role of RTI in Section 194Q-Related Queries<\/a><\/li><li><a href=\"#how-rtiwala-can-help\">How RTIwala Can Help<\/a><\/li><li><a href=\"#rtiwala-service-promotion\">RTIwala Service Promotion<\/a><\/li><\/ol><\/nav>\n\n\n<h2 class=\"wp-block-heading\" id=\"introduction\">Introduction<\/h2>\n\n\n\n<p><a href=\"https:\/\/cc.rti.link\/orf\" data-type=\"link\" data-id=\"https:\/\/cc.rti.link\/orf\" target=\"_blank\" rel=\"noreferrer noopener\">Section 194Q <\/a>of the Income Tax Act, 1961, introduced in the Union Budget 2021, mandates the deduction of <a href=\"https:\/\/cc.rti.link\/aro\" data-type=\"link\" data-id=\"https:\/\/cc.rti.link\/aro\" target=\"_blank\" rel=\"noreferrer noopener\">Tax Deducted at Source<\/a> (TDS) by buyers on certain purchases of goods. This section aims to bring more transactions under the tax net, ensuring transparency and compliance. Applicable from July 1, 2021, it has significant implications for businesses engaged in large-scale purchases. This article explains the provisions, applicability, and compliance requirements under Section 194Q.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"key-provisions-of-section-194q\">Key Provisions of Section 194Q<\/h2>\n\n\n\n<ol>\n<li><strong>Applicability<\/strong>\n<ul>\n<li>The provision applies to buyers who are responsible for deducting TDS on certain <a href=\"https:\/\/cc.rti.link\/arf\" data-type=\"link\" data-id=\"https:\/\/cc.rti.link\/arf\" target=\"_blank\" rel=\"noreferrer noopener\">goods purchases.<\/a><\/li>\n\n\n\n<li>Buyers with a turnover exceeding \u20b910 crores in the previous financial year are required to deduct TDS.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Threshold Limit<\/strong>\n<ul>\n<li>TDS under Section 194Q is applicable only if the value of purchases from a seller exceeds \u20b950 lakhs in a financial year.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Rate of TDS<\/strong>\n<ul>\n<li>TDS is to be deducted at 0.1% of the purchase value exceeding \u20b950 lakhs.<\/li>\n\n\n\n<li>If the seller does not provide a PAN, the TDS rate increases to 5%.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Timing of TDS Deduction<\/strong>\n<ul>\n<li>TDS should be deducted at the time of:\n<ul>\n<li>Credit to the seller\u2019s account, or<\/li>\n\n\n\n<li>Payment, whichever is earlier.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Non-Applicability<\/strong>\n<ul>\n<li>Section 194Q does not apply to:\n<ul>\n<li>Transactions where TDS is already deducted under another section.<\/li>\n\n\n\n<li>Import of goods from outside India.<\/li>\n\n\n\n<li>Sellers with a turnover below<a href=\"https:\/\/cc.rti.link\/rfa2\" data-type=\"link\" data-id=\"https:\/\/cc.rti.link\/rfa2\" target=\"_blank\" rel=\"noreferrer noopener\"> \u20b910 crores.<\/a><\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"objectives-of-section-194q\">Objectives of Section 194Q<\/h2>\n\n\n\n<ul>\n<li><strong>Widening the Tax Base<\/strong>: Ensuring high-value transactions are accounted for under the <a href=\"https:\/\/rtiwala.com\/contact-us\" data-type=\"link\" data-id=\"https:\/\/rtiwala.com\/contact-us\" target=\"_blank\" rel=\"noreferrer noopener\">tax framework.<\/a><\/li>\n\n\n\n<li><strong>Promoting Compliance<\/strong>: Encouraging both buyers and sellers to maintain accurate transaction records.<\/li>\n\n\n\n<li><strong>Reducing Tax Evasion<\/strong>: Identifying unreported income through a trail of large purchases.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"detailed-example-of-tds-under-section-194q\">Detailed Example of TDS Under Section 194Q<\/h2>\n\n\n\n<h5 class=\"wp-block-heading\" id=\"scenario\">Scenario:<\/h5>\n\n\n\n<ul>\n<li>Buyer\u2019s Turnover (FY 2022-23): \u20b912 crores.<\/li>\n\n\n\n<li>Seller\u2019s Turnover: \u20b98 crores.<\/li>\n\n\n\n<li><a href=\"https:\/\/rtiwala.com\/pricing\" data-type=\"link\" data-id=\"https:\/\/rtiwala.com\/pricing\" target=\"_blank\" rel=\"noreferrer noopener\">Purchases from <\/a>the Seller: \u20b970 lakhs in FY 2023-24.<\/li>\n<\/ul>\n\n\n\n<h5 class=\"wp-block-heading\" id=\"calculation\">Calculation:<\/h5>\n\n\n\n<ol>\n<li>Threshold Limit: \u20b950 lakhs.<\/li>\n\n\n\n<li>Purchase Value Exceeding Threshold: \u20b970 lakhs &#8211; \u20b950 lakhs = \u20b920 lakhs.<\/li>\n\n\n\n<li>TDS to be Deducted: 0.1% of \u20b920 lakhs = \u20b92,000.<\/li>\n<\/ol>\n\n\n\n<p>The buyer must deduct \u20b92,000 as TDS and deposit it with the government.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"buyers-responsibilities-under-section-194q\">Buyer\u2019s Responsibilities Under Section 194Q<\/h2>\n\n\n\n<ol>\n<li><strong>Verify Turnover<\/strong>\n<ul>\n<li>Ensure the turnover exceeds \u20b910 crores in the previous <a href=\"https:\/\/rtiwala.com\/content\/how-to-file-an-rti-online\/\" data-type=\"link\" data-id=\"https:\/\/rtiwala.com\/content\/how-to-file-an-rti-online\/\" target=\"_blank\" rel=\"noreferrer noopener\">financial year.<\/a><\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Track Purchases<\/strong>\n<ul>\n<li>Maintain detailed records of purchases to monitor the \u20b950 lakh threshold for each seller.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>PAN Verification<\/strong>\n<ul>\n<li>Verify the seller\u2019s PAN to avoid higher TDS rates.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>TDS Deduction and Deposit<\/strong>\n<ul>\n<li>Deduct TDS on time and deposit it with the Income <a href=\"https:\/\/rtiwala.com\/content\/what-is-the-process-of-first-appeal\/\" data-type=\"link\" data-id=\"https:\/\/rtiwala.com\/content\/what-is-the-process-of-first-appeal\/\" target=\"_blank\" rel=\"noreferrer noopener\">Tax Department <\/a>using Form 26Q.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Issue TDS Certificates<\/strong>\n<ul>\n<li>Provide the seller with a TDS Certificate (Form 16A).<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"implications-for-sellers\">Implications for Sellers<\/h2>\n\n\n\n<ol>\n<li><strong>TDS Credit<\/strong>\n<ul>\n<li>The TDS deducted under<a href=\"https:\/\/rtiwala.com\/content\/what-is-the-right-to-information-rti-act\/\" data-type=\"link\" data-id=\"https:\/\/rtiwala.com\/content\/what-is-the-right-to-information-rti-act\/\" target=\"_blank\" rel=\"noreferrer noopener\"> Section 194Q <\/a>is reflected in the seller\u2019s Form 26AS and can be claimed while filing income tax returns.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Increased Compliance<\/strong>\n<ul>\n<li>Sellers must ensure their PAN is updated with buyers to avoid higher TDS rates.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Record-Keeping<\/strong>\n<ul>\n<li>Maintain accurate records to reconcile TDS deductions during tax filing.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"comparison-between-section-194q-and-section-206c1h\">Comparison Between Section 194Q and Section 206C(1H)<\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table><thead><tr><th><strong>Feature<\/strong><\/th><th><strong>Section 194Q (TDS)<\/strong><\/th><th><strong>Section 206C(1H) (TCS)<\/strong><\/th><\/tr><\/thead><tbody><tr><td><strong>Applicability<\/strong><\/td><td>Buyer<\/td><td>Seller<\/td><\/tr><tr><td><strong>Turnover Threshold<\/strong><\/td><td>\u20b910 crores (buyer)<\/td><td>\u20b910 crores (seller)<\/td><\/tr><tr><td><strong>Transaction Threshold<\/strong><\/td><td>Purchases exceeding \u20b950 lakhs<\/td><td>Receipts exceeding \u20b950 lakhs<\/td><\/tr><tr><td><strong>Rate<\/strong><\/td><td>0.1%<\/td><td>0.1%<\/td><\/tr><tr><td><strong>Effective Date<\/strong><\/td><td>July 1, 2021<\/td><td>October 1, 2020<\/td><\/tr><tr><td><strong>Responsible Party<\/strong><\/td><td>Buyer<\/td><td>Seller<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"challenges-and-concerns\">Challenges and Concerns<\/h2>\n\n\n\n<ol>\n<li><strong>Double Deduction Confusion<\/strong>\n<ul>\n<li>Buyers and sellers often face confusion about whether TDS or TCS applies.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Administrative Burden<\/strong>\n<ul>\n<li>Increased compliance requirements for maintaining purchase and <a href=\"https:\/\/rtiwala.com\/content\/how-to-file-an-anonymous-rti\/\" data-type=\"link\" data-id=\"https:\/\/rtiwala.com\/content\/how-to-file-an-anonymous-rti\/\" target=\"_blank\" rel=\"noreferrer noopener\">deduction records.<\/a><\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Higher TDS Rate Without PAN<\/strong>\n<ul>\n<li>Sellers without PAN face significantly higher TDS rates (5%).<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Threshold Monitoring<\/strong>\n<ul>\n<li>Both parties must closely track transactions to ensure compliance with thresholds.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"role-of-rti-in-section-194q-related-queries\">Role of RTI in Section 194Q-Related Queries<\/h2>\n\n\n\n<p>The <a href=\"https:\/\/rtiwala.com\/content\/how-to-file-online-rti-for-passport-delay\/\" data-type=\"link\" data-id=\"https:\/\/rtiwala.com\/content\/how-to-file-online-rti-for-passport-delay\/\" target=\"_blank\" rel=\"noreferrer noopener\">Right to Information (RTI) <\/a>Act can help address issues or clarifications related to Section 194Q:<\/p>\n\n\n\n<ol>\n<li><strong>TDS Deposit Verification<\/strong>\n<ul>\n<li><a href=\"https:\/\/rtiwala.com\/content\/how-to-file-online-rti-for-marksheet-verification\/\" data-type=\"link\" data-id=\"https:\/\/rtiwala.com\/content\/how-to-file-online-rti-for-marksheet-verification\/\" target=\"_blank\" rel=\"noreferrer noopener\">File RTI <\/a>to confirm if deducted TDS has been deposited with the Income Tax Department.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Dispute Resolution<\/strong>\n<ul>\n<li>Seek clarity on disputes related to mismatches in TDS or compliance.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Request for Records<\/strong>\n<ul>\n<li>Inquire about government notices or discrepancies regarding Section 194Q.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Policy Clarifications<\/strong>\n<ul>\n<li><a href=\"https:\/\/rtiwala.com\/content\/what-information-cannot-be-given-under-rti\/\" data-type=\"link\" data-id=\"https:\/\/rtiwala.com\/content\/what-information-cannot-be-given-under-rti\/\" target=\"_blank\" rel=\"noreferrer noopener\">Use RTI<\/a> to request detailed guidelines on Section 194Q.<\/li>\n<\/ul>\n<\/li>\n<\/ol>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"how-rtiwala-can-help\">How RTIwala Can Help<\/h2>\n\n\n\n<p>If you face challenges related to Section 194Q compliance, RTIwala provides expert assistance:<\/p>\n\n\n\n<ol>\n<li><strong>File RTI Online<\/strong>: Obtain clarity on <a href=\"https:\/\/rtiwala.com\/content\/steps-to-take-if-your-rti-application-is-ignored-rtiwala-expert-advice\/\" data-type=\"link\" data-id=\"https:\/\/rtiwala.com\/content\/steps-to-take-if-your-rti-application-is-ignored-rtiwala-expert-advice\/\" target=\"_blank\" rel=\"noreferrer noopener\">TDS-related<\/a> issues or unresolved disputes.<\/li>\n\n\n\n<li><strong>Anonymous RTI<\/strong>: Address sensitive tax concerns while maintaining confidentiality.<\/li>\n\n\n\n<li><strong>Custom Drafting<\/strong>: Professionally crafted RTI applications tailored to your queries.<\/li>\n\n\n\n<li><strong>Follow-Up Support<\/strong>: Ensure timely responses from<a href=\"https:\/\/rtiwala.com\/content\/how-to-track-rti-application-a-comprehensive-guide-by-rtiwala\/\" data-type=\"link\" data-id=\"https:\/\/rtiwala.com\/content\/how-to-track-rti-application-a-comprehensive-guide-by-rtiwala\/\" target=\"_blank\" rel=\"noreferrer noopener\"> tax authorities.<\/a><\/li>\n<\/ol>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\" \/>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"rtiwala-service-promotion\">RTIwala Service Promotion<\/h2>\n\n\n\n<p>Simplify your tax compliance with RTIwala trusted services:<\/p>\n\n\n\n<ul>\n<li><strong>Expert Consultation<\/strong>: Get personalized advice on Section 194Q and TDS issues.<\/li>\n\n\n\n<li><strong>Online RTI<\/strong>: File RTIs to resolve tax disputes or delays.<\/li>\n\n\n\n<li><strong>Anonymous RTI<\/strong>: Protect your identity while addressing tax concerns.<\/li>\n\n\n\n<li><strong>Custom Drafting<\/strong>: Tailored<a href=\"https:\/\/rtiwala.com\/content\/how-to-file-an-rti-online\/\" data-type=\"link\" data-id=\"https:\/\/rtiwala.com\/content\/how-to-file-an-rti-online\/\" target=\"_blank\" rel=\"noreferrer noopener\"> RTI applications<\/a> for effective outcomes.<\/li>\n\n\n\n<li><strong>Products<\/strong>: Explore solutions for taxation and compliance.<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Introduction Section 194Q of the Income Tax Act, 1961, introduced in the Union Budget 2021, mandates the deduction of Tax Deducted at Source (TDS) by buyers on certain purchases of goods. This section aims to bring more transactions under the tax net, ensuring transparency and compliance. Applicable from July 1, 2021, it has significant implications [&hellip;]<\/p>\n","protected":false},"author":16,"featured_media":14542,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_seopress_robots_primary_cat":"none","_seopress_titles_title":"Section 194Q of Income Tax Act: TDS on Goods Purchases","_seopress_titles_desc":"Understand Section 194Q of Income Tax Act, its TDS provisions, and compliance tips. Simplify queries with RTIwala assistance.","_seopress_robots_index":"","jnews-multi-image_gallery":[],"jnews_single_post":{"format":"standard"},"jnews_primary_category":[],"jnews_social_meta":[],"footnotes":""},"categories":[695],"tags":[1526,732,1532,1533,1534],"acf":[],"_links":{"self":[{"href":"https:\/\/rtiwala.com\/content\/wp-json\/wp\/v2\/posts\/14536"}],"collection":[{"href":"https:\/\/rtiwala.com\/content\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/rtiwala.com\/content\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/rtiwala.com\/content\/wp-json\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/rtiwala.com\/content\/wp-json\/wp\/v2\/comments?post=14536"}],"version-history":[{"count":3,"href":"https:\/\/rtiwala.com\/content\/wp-json\/wp\/v2\/posts\/14536\/revisions"}],"predecessor-version":[{"id":14541,"href":"https:\/\/rtiwala.com\/content\/wp-json\/wp\/v2\/posts\/14536\/revisions\/14541"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/rtiwala.com\/content\/wp-json\/wp\/v2\/media\/14542"}],"wp:attachment":[{"href":"https:\/\/rtiwala.com\/content\/wp-json\/wp\/v2\/media?parent=14536"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/rtiwala.com\/content\/wp-json\/wp\/v2\/categories?post=14536"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/rtiwala.com\/content\/wp-json\/wp\/v2\/tags?post=14536"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}