What is TDS on purchases

Question

Accepted Answer

TDS on purchases refers to the tax deducted at source on payments made for purchases of goods or services.

TDS on purchases is a mechanism to collect tax at the time of making payments for purchases.
The person making the payment (deductor) deducts a certain percentage of the payment as TDS and remits it to the government.
The deductor then issues a TDS certificate to the payee (deductee) as proof of tax deduction.
The TDS rates vary depending on the nature of the payment and are specified by the Income Tax Act.
For example, if a company purchases goods worth Rs. 1,00,000 from a vendor, and the applicable TDS rate is 10%, the company will deduct Rs. 10,000 as TDS and pay the remaining amount to the vendor.

Accepted Answer

TDS is levied at a rate of 0.1 per cent of the transaction value of items purchased in excess of Rs. 50 lakhs. If the deductee fails to provide his or her PAN to the deductor, this rate may be as high as 5%.

What is TDS on purchases

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