By CA. Manish Agarwal | 22 June, 2021

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A new TDS section (194Q) (under the Income-tax Act, 1961) is applicable w.e.f. 1st July, 2021, according to which, subject to certain exceptions, a buyer of goods is required to do tax withholding (TDS) at the rate of 0.1% of the amount payable to the seller, if:

• Turnover of the buyer in the preceding financial year exceeds Rs. 10 crores;

• Total value of goods purchased from the seller exceeds Rs. 50 lakhs

TDS is applicable on an amount exceeding Rs. 50 lakhs and it is to be done at the time of payment or credit whichever is earlier. It is important to note that If TDS is applicable and done in the above manner, the seller is not required to do TCS (u/s 206C(1H)) while collecting the sale consideration from the buyer. From the seller's perspective, to comply with the TCS provisions, a suitable declaration may be obtained from the buyer. The below flow charts may be referred to understand the requirements and inter-play between TDS and TCS provisions.