Section 194Q Applies
This section applies to a buyer in the following cases:
- A buyer whose turnover or gross receipt or sales in the immediately preceding financial year was more than Rs 10 crore, and
- A buyer is responsible for making payment of a sum to the resident seller, and
Such payment is to be done for the purchase of goods of the value/aggregate of the value exceeding Rs 50 lakh
Rate of TDS
- Tax is to be deducted at source at the rate of 0.1% on the amount exceeding Rs 50 lakh in a financial year from a seller from whom the buyer has purchased goods worth more than Rs 50 lakh.
- Purchase above Rs 50 lakh in a financial year from a seller.
- TDS to be deducted after deduction of Rs 50 lakh from the total value of purchases.
- The threshold limit is Rs 50 lakh, which means a seller-wise deduction in every financial year
Non-furnishing of PAN
In cases where a seller fails to furnish a Permanent Account Number (PAN) to a buyer, the TDS would be deducted at the rate of 5% instead of 0.1%.
It is important to note that without PAN information, the rate of tax applicable in other cases is 20%. In the case of Section 194Q, the TDS rate applicable is 5%.
Due date of payment and return
- The TDS is to be deposited on or before the seventh day of the month following the month in which the TDS is deducted. For example, if the deduction month is January, the due date of payment is February 7.
- However, in the case of March, the TDS can be deposited up to April 30.
- For a quarter ending June 30, September 30, December 31, and March 31, the due date for filing TDS return is July 31, October 31, January 31, and May 31, respectively.
