Elaborate sec. 194Q

Question

Elaborate sec. 194Q

Accepted Answer

Sec. 194Q is a provision under the Income Tax Act, 1961 which requires deduction of tax at source on purchase of goods.

Sec. 194Q mandates deduction of tax at source at the rate of 0.1% on purchase of goods exceeding Rs. 50 lakhs in a financial year.
It applies to a buyer whose turnover exceeds Rs. 10 crores in the preceding financial year.
The buyer is required to deduct TDS at the time of credit or payment, whichever is earlier.
The seller can claim credit of the TDS deducted against their tax liability.
Non-compliance with sec. 194Q can attract penalty and interest.
Example: If a company purchases goods worth Rs. 60 lakhs from a seller, it must deduct 0.1% TDS on the amount exceeding Rs. 50 lakhs.

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