New IT Section 194Q: TDS on Payment for Purchase of Goods

As per Clause 48 of the Finance Bill 2021, new Section 194Q: Deduction of tax at source on payment of certain sum for purchase of goods, in view of TDS of 0.1% proposed on transaction of purchase of goods exceeding Rs. 50 lakh in a year.

Proposed IT Section 194Q: Deduction of tax at source on payment of certain sum for purchase of goods

(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 per cent. of such sum exceeding fifty lakh rupees as income-tax.

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.

(2) Where any sum referred to in sub-section (1) is credited to any account, whether called “suspense account” or by any other name, in the books of account of the person liable to pay such income, such credit of income shall be deemed to be the credit of such income to the account of the payee and the provisions of this section shall apply accordingly.

(3) If any difficulty arises in giving effect to the provisions of this section, the Board may, with the previous approval of the Central Government, issue guidelines for the purpose of removing the difficulty.

(4) Every guideline issued by the Board under sub-section (3) shall, as soon as may be after it is issued, be laid before each House of Parliament, and shall be binding on the income-tax authorities and the person liable to deduct tax.

(5) The provisions of this section shall not apply to a transaction on which,-

(a) tax is deductible under any of the provisions of this Act; and

(b) tax is collectible under the provisions of section 206C other than a transaction to which sub-section (1H) of section 206C applies.

0.1% TDS on Purchase of Goods above 50 lacs proposed in Budget 2021

Related Posts:

Union Budget India 2021-22/ Finance Bill, 2021 (Download PDF Copy)

Key Proposals on Direct/ Indirect Taxes: Budget 2021

ITR filing exemption for Senior Citizens (75 or above) proposed in Budget 2021

0.1% TDS on Purchase of Goods above 50 lacs proposed in Budget 2021 

Enhanced Tax Audit Exemption limit of Rs. 10 crore for Digital Turnover, proposed in Budget 2021

Time Limit Reduced for Re-opening Income Tax Proceedings proposed in Budget 2021

ICAI’s Pre Budget Memorandum 2021 on Direct Taxes/ International Taxation

CBDT Updates (Income Tax)
Income Tax Circulars, Instructions, Notifications, Orders, Press Releases, etc. issued by the Central Board of Direct Taxes (CBDT) in different years:
CBDT Circulars: 2021, 2020, 2019, 2018, 2017
CBDT Instructions: 2020, 2019, 2018, 2017, 2016, 2015
CBDT Notifications: 2021, 2020, 2019, 2018, 2017
CBDT Orders: 2021, 2020, 2019, 2018, 2017
CBDT Press Releases: 2021, 2020, 2019, 2018, 2017, 2016, 2015
Note: For Official/ updated copy, please visit the Income Tax Deptt. website.

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