COMPARISON BETWEEN TDS 194Q VS. TCS 206C(1H) UNDER THE INCOME TAX ACT, 1961. ARE YOU A SELLER OR BUYER.. WHICH ONE IS APPLICABLE ON YOU ?

1. TDS 194Q
vs.
TCS 206C(1H)
under the Income Tax Act, 1961
BY CA AMITOZ SINGH
Ex-Chairman – Chandigarh Branch of NIRC of ICAI

2. TDS u/s 194Q = 0.1%* of [Total
Purchases (Minus) ₹ 50 Lakhs]
* In non-PAN/ Aadhaar cases, the
rate shall be 5%.
TCS u/s 206(1H) = 0.1% of [Total
Sale Receipt (Minus) ₹ 50 Lakhs]
*In non-PAN/ Aadhaar cases, the rate
shall be 1%
Presented By CA AMITOZ SINGH

3. Which Section is applicable on
you ?
TDS 194Q or TCS 206C(1H) ?
To know that we need to
know who are you –
Purchaser or Seller ?
Presented By CA AMITOZ SINGH

4. Are you a Purchaser ? - YES
Presented By CA AMITOZ SINGH
Was your turnover more than Rs. 10 Crores in
preceding year - YES
Do you have purchases more than Rs. 50 lakhs
from Single Seller - YES
Purchaser Saheb, Go Ahead – DEDUCT TDS u/s
194Q @ 0.1%*

5. Are you a Purchaser ? - YES
Presented By CA AMITOZ SINGH
Was your turnover more than Rs. 10 Crores in
preceding year - YES
Do you have purchases more than Rs. 50 lakhs
from Single Seller - NO
Purchaser Saheb, Chill and Relax
NO TDS and No TCS

6. Are you a Seller ? - YES
Presented By CA AMITOZ SINGH
Was your turnover more than Rs. 10
Crores in preceding year - YES
Do you have collection of more than Rs. 50
lakhs from Single purchaser - YES
Seller Saheb, no TCS to be collected
Your Purchaser will DEDUCT TDS u/s 194Q @ 0.1%
Is your purchaser having turnover of more than
Rs. 10 Crores in preceding year - YES

7. Are you a Seller ? - YES
Presented By CA AMITOZ SINGH
Was your turnover more than Rs. 10
Crores in preceding year - YES
Do you have collection of more than Rs. 50
lakhs from Single purchaser - YES
Seller Saheb, collect TCS u/s 206C(1H) @ 0.1%
Your Purchaser will NOT DEDUCT TDS
Is your purchaser having turnover of more than
Rs. 10 Crores in preceding year - NO

8. Are you a Seller ? - YES
Presented By CA AMITOZ SINGH
Was your turnover more than Rs. 10
Crores in preceding year - YES
Do you have collection of more than Rs. 50
lakhs from Single purchaser - NO
Seller Saheb, Chill and Relax
NO TDS and No TCS

9. Who will win in case of fight
between 194Q and 206C(1H) ?
Presented By CA AMITOZ SINGH
It has been specified under second proviso to
Section 206C(1H) that if TDS u/s 194Q is
applicable then TCS u/s 206C(1H) will not be
applicable. So, TDS u/s 194Q will win the fight.

10. Process to be followed ?
Presented By CA AMITOZ SINGH
As a eligible buyer: – It will be your responsibility. So
deduct TDS u/s 194Q.
As a eligible seller: Take a declaration from your
buyers that they will deduct TDS u/s 194Q and
comply the same, else you need to charge TCS if
buyers are not eligible or no such declaration is
received or no such treatment is given by your
buyers.

11. Presented By CA AMITOZ SINGH
Effective date ?
Under Section 194Q - 01/07/2021
Under Section 206C(1H) - Already Applicable
from 01/10/2020
Both the Provisions will apply only in the case
where Buyer and Seller both are Resident, if
one of them is Non-Resident then these
Provisions will not Apply.

12. Presented By CA AMITOZ SINGH
Effects on Advance Payments ?
Under Section 194Q - TDS to be Deducted on
Advance Payments made for the purchase of
Goods
Under Section 206C(1H) - If the buyer is
deducting TDS, then TCS is not required to
collect.

13. Presented By CA AMITOZ SINGH
Is TDS u/s 194Q applicable on purchase
of capital goods?
“Goods” as per CGST Act 2017 means
any kind of movable property other than
services. Thus TDS u/s 194Q is applicable
on purchase of capital goods.

14. Presented By CA AMITOZ SINGH
Is TDS u/s 194Q applicable on Import
Purchases as well?
No, Since the provision of section 194Q,
are applicable when a Buyer is
responsible for paying any sum to any
resident seller for purchase of any goods.
TDS u/s 194Q is not to be deducted from
Import purchases.

15. Presented By CA AMITOZ SINGH
What if buyer fails to deduct TDS u/s
194Q?
As per Section 40a(ia) – If buyer fails to
deduct and deposit TDS, purchase
expenditure to the extent of 30% will be
disallowed and shall be subject to
Income Tax at applicable tax rate.

16. Presented By CA AMITOZ SINGH
CBDT vide Circular No. 17 of 2020, clarified that
provisions of Section 206C(1H) shall not be
applicable in relation to transactions in securities
(and commodities) which are traded through
recognised stock exchanges or cleared and settled
by the recognised clearing corporation, including
recognised stock exchanges or recognised clearing
corporations located in International Financial
Service Centre (IFSC).
Applying the rationale behind such clarification, it is
inferred that the CBDT may allow a similar exemption
from TDS under Section 194Q as well.

17. Presented By CA AMITOZ SINGH
Particulars 194Q 206C(1H)
Purpose Tax to be DEDUCTED Tax to be COLLECTED
Applicable To Buyer / Purchaser Seller
With Effect
from
1st July 2021 1st October, 2020
When
Deducted or
Collected
Payment or credit,
whichever is earlier
At the time of Receipt
Advances TDS shall be deducted on
advance payments made
TCS shall be collected on
advance receipts
Rate of
TDS/TCS
0.1% 0.1% (0.075% for FY 2020-21
PAN Not
Available
5% 1%
Comparison of Sec 194Q and 206C(1H) of Income Tax Act, 1961

18. Presented By CA AMITOZ SINGH
Particulars 194Q 206C(1H)
Triggering
Point
Turnover / Gross Receipts /
Sales from the business of
BUYER should exceed Rs.10
crore during previous year
(Excluding GST)
Purchase of goods of
aggregate value
exceeding Rs. 50 Lakhs in
P.Y. (The value of goods
includes GST)
Turnover / Gross Receipts
/ Sales from the business
of SELLER should exceed
Rs.10 crore during
previous year (Excluding
GST)
Sale consideration
received exceeds Rs.50
Lakhs in P.Y. (The value of
goods includes GST)
Comparison of Sec 194Q and 206C(1H) of Income Tax Act, 1961

19. Presented By CA AMITOZ SINGH
Particulars 194Q 206C(1H)
Exclusions Yet to be notified by
government
If Buyer is-
Importer of goods
Central/State Government, Local
Authority
An embassy, High Commission,
legation, commission, consulate
and trade representation of a
foreign state.
Comparison of Sec 194Q and 206C(1H) of Income Tax Act, 1961

20. Presented By CA AMITOZ SINGH
Particulars 194Q 206C(1H)
When to Deposit /
Collect
Tax so deducted shall
be deposited with
government by 7th day
of subsequent month
Tax so collected shall
be deposited with
government by 7th day
of subsequent month
Quarterly Statement
to be filed
26Q 27EQ
Certificate to be
issued to Seller /
Buyer
Form 16A Form 27D
Comparison of Sec 194Q and 206C(1H) of Income Tax Act, 1961

21. Presented By CA AMITOZ SINGH
ILLUSTRATIONS:
Turnover of Seller
(in Crores)
11 11 9
Turnover of Buyer
(in Crores)
9 9 11
Amt. recd. or paid for sales or
purchase of Goods in
previous year (in Lakhs)
55 55 55
Taxable Amount 5 5 5
Whether PAN Available
Buyer PAN
Available
Buyer PAN Not
Available
Seller PAN
Available
TDS or TCS TCS @ 0.1% TCS @ 1% TDS @ 0.1%
Liable Person Seller Seller Buyer
Applicable Section 206C(1H) 206C(1H) 194Q
Excluded Section 194Q 194Q 206C(1H)
Explanation
Buyer Turnover
< Rs. 10 Cr.
Buyer Turnover
< than Rs. 10 Cr.
Seller Turnover
< Rs. 10 Cr.

22. Presented By CA AMITOZ SINGH
ILLUSTRATIONS:
Turnover of Seller
(in Crores)
9 11 11
Turnover of Buyer
(in Crores)
11 11 11
Amt. recd. or paid for sales or
purchase of Goods in
previous year (in Lakhs)
55 55 55
Taxable Amount 5 5 5
Whether PAN Available
Seller PAN Not
Available
Seller PAN
Available
Seller PAN Not
Available
TDS or TCS TDS @ 5% TDS @ 0.1% TDS @ 5%
Liable Person Buyer Buyer Buyer
Applicable Section 194Q & 206AA 194Q 194Q & 206AA
Excluded Section 206C(1H) 206C(1H) 206C(1H)
Explanation
Seller Turnover
< Rs. 10 Cr.
Exclusion u/s
206C(1H)
Exclusion u/s
206C(1H)

23. THANK YOU
CA Amitoz Singh Kamboj
Partner
APT & Co LLP , Chartered Accountants
Plot no. 1632, Sector 82 – JLPL Industrial Area, Mohali
Plot No. 181/33, Indl Area 1, Chandigarh
Ex-Chairman (2020-21)
Chandigarh Branch (NIRC) of The Institute of Chartered Accountants of India
|M| +91 987 202 7526, +91 936 900 0007
|E| ca.amitozsingh@gmail.com |W| www.aptllp.com
Disclaimer: Though full efforts have been made to state the interpretations of law correctly, this write up is not intended to be a professional advice to anyone, therefore neither the Author nor the Organization
accepts any responsibility whatsoever and hence no liability can arise for any losses, claims or due to the contents of this write up.