TDS on Purchase of Goods (Section 194Q and 206C(1H))

TDS under this Section is to be deducted by the buyer, if-

1. The person, being buyer whose turnover from the business carried on by him exceeded 10 Crore during the preceding financial year.
2. The buyer is responsible for making payment of a sum to the resident seller for the purchase of goods and purchase value exceeds INR 50 lakhs in a year, TDS has to be deducted.
3. The rate of TDS deduction will be:
   1. @ 0.1% of the Sum exceeding Rs. 50 Lakh under 194Q.
   2. @ 5%, If PAN is not provided by the Seller under 206AA.
4. Payment includes any credit of Seller’s account/Suspense Account in the Books of Buyer.

TCS under this Section is to be Collected by the Seller, if-

1. 1. If seller’s turnover from the business carried on by him exceeded ten crore rupees during the Preceding financial year and
2. The seller receives any amount as consideration for the sale of any goods of the value or aggregate of such value exceeding INR 50 lakhs in any previous year from such buyer.
3. The rate of TCS to be collected will be:
   1. @0.1% on the Sum exceeding Rs. 50 Lakh under 206C(1H).
   2. @1% on the Sum exceeding Rs. 50 Lakh, if the PAN is not provided by the buyer under 206CC.
4. TCS shall be collected by the Seller only on receipt from the buyer.
5. TCS under 206C(1H) will not be applicable to the transaction in following goods:
   1. Goods being exported out of India,
   2. Goods covered under section 206C(1), 206C(1F), 206C(1G) of the Act.
6. Buyer doesn’t include the following persons for 206C(1H):
   1. State/Central Govt.
   2. Local Authorities.

As per 194Q(5), If both 194Q and 206C(1H) is applicable, Then 194Q will prevail and Buyer needs to deduct TDS under 194Q.