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New section inserted by Finance Act 2021

The Finance Act, 2021, has introduced many new provisions regarding deduction or collection of tax at source. One of them is:



Section 194Q - TDS on purchase of goods

Applicable from 01.07.2021

As per section 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 fifty 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% of such sum exceeding fifty lakh rupees as income-tax.

**Rate increases to 5% in case of seller not having PAN, as per section 206AA of the Income Tax Act, 1961.

Explanation – For the purposes of this sub-section, “buyer” means a person 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, not being a person, as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.

Non Applicability as per Section 194Q(5):

Provisions of section 194Q 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.

 

 

Disclaimer:

The contents of this article are solely for informational purpose. It does not constitute any professional advice. The author does not represent that the contents of the article are accurate or complete. Neither the Site/Blog ‘Your Instasolv’ and the author accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

 

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