TDS 194Q vs. TCS 206C(1H)

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TDS 194Q vs. TCS 206C(1H)

Difference between Section 194Q and Section 206C(1H)

Since both the sections relate to a single transaction, let us analyze the difference between the two along with examples.

Particulars

Section 194Q

Section 206C(1H)

Applicable

If the turnover of the Buyer is more than 10 Crore in Previous FY.

If the turnover of the Seller is more than 10 Crore in Previous FY.

Threshold for Sale/ Purchase

Purchases more than 50 Lakhs

Sales more than 50 Lakhs

Time of Deduction/ Collection

At the time of payment or credit whichever is earlier

At the time of receipt

Rate

0.1%

5% (PAN not available)

0.1%

1% (PAN not available)

Liability of Deduction/ Collection

Buyer is liable

Seller is liable

The main issue/ confusion is that whether on 1 transaction the buyer is liable for deduction of TDS u/s 194Q and Seller is liable for collection u/s 206C(1H)?

 

Section 194Q(5) states that no TDS shall be deducted on transactions that are covered u/s 206C [other than 206C(1H)].

The second proviso to Section 206C(1H) states that TCS under this provision shall not be collected if the transaction is covered under any other provision

Having a careful reading of both the provisions, one can conclude that the primary liability is on the buyer to deduct TDS. If the buyer is liable to deduct TDS, then the seller shall not collect TCS on the same, but if the buyer is not liable for TDS deduction then Seller has to collect TCS u/s 206C(1H).

Example explaining Applicability

S. No.

Buyer’s Turnover Seller’s Turnover Transaction Value Section Applicable

1

11 Cr. 9 Cr. 60 Lakhs 194Q
2 9 Cr. 11 Cr.

60 Lakhs

206C(1H)

3 11 Cr. 11 Cr. 60 Lakhs

194Q

4

9 Cr. 9 Cr. 60 Lakhs NA
5 11 Cr. 11 Cr. 40 Lakhs

NA



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About CA Mehul Gupta 30 Articles
Chartered Accountant in practice, Certified GST Practitioner & Commerce Graduate. He is mainly engaged in the practice of Direct taxes, GST, International taxation, & assurance services. A visiting faculty in the Faridabad Branch of ICAI.

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