Section 194Q:
Section 194Q was introduced by the Finance Act, 2021, and it applies to certain buyers who purchase goods from a resident seller. The key points are:
Applicability: This section applies if the buyer’s turnover or gross receipts in the preceding financial year exceed Rs. 10 crores.
Transaction Type: It is applicable to the purchase of goods only, not services.
Threshold: TDS (Tax Deducted at Source) is required to be deducted at 0.1% of the purchase consideration exceeding Rs. 50 lakhs in a financial year.
Buyer’s Responsibility: The buyer is responsible for deducting TDS at the time of credit of the purchase consideration or at the time of payment, whichever is earlier.
Section 206C(1H):
Section 206C(1H) is another provision introduced by the Finance Act, 2020. It pertains to the collection of tax at source by the seller from the buyer for the sale of goods. The key points are:
Applicability: This section applies if the seller’s turnover in the preceding financial year exceeds Rs. 10 crores.
Transaction Type: It is applicable to the sale of goods.
Threshold: The seller is required to collect TCS (Tax Collected at Source) at 0.1% of the sale consideration exceeding Rs. 50 lakhs in a financial year.
Seller’s Responsibility: The seller is responsible for collecting TCS at the time of receipt of the amount or at the time of debiting the amount, whichever is earlier.
Can Both Apply on the Same Transaction:
Both Section 194Q and Section 206C(1H) have distinct applicability and responsibilities for deducting/collecting tax. Wherever 194Q applies, 206C (1H) does not apply. So TCS is applicable ONLY where the TDS provisions are not attracted
