Crux of 206AB & 194Q

1. NEWLY INSERTED
PROVISIONS OF TDS &
TCS w.e.f. 01/07/2021

2. SECTION 194Q
(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) forpurchaseof anygoodsof thevalueoraggregateof 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 percent. of such sum exceeding
fifty lakh rupeesas income-tax.
Explanation.––For the purposes of this sub-section, “buyer”
meansa personwhose total sales, grossreceiptsorturnoverfrom
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 bespecified therein.

3. WHO HAS TO DEDUCT ?
• ANY PERSON
• BEING A BUYER RESPONSIBLE FOR MAKING
P
A
YMENT TO RESIDENT FOR PURCHASE OF
GOODS
• VALUE EXCEEDING 50 LACS
• DEDUCTION @.1% ON SUM EXCEEDING 50 LACS

4. BUYER MEANS
A PERSON WHOSE TOTAL SALES, GROSS
RECEIPTS OR TURNOVER EXCEEDS 10 CRORES IN
THE IMMEDIATELY PRECEDING FINANCIAL
YEAR.

5. GOODS MEANS
THE SALE OF GOODS ACT, 1930 IS A SPECIFIC
STATUTE WHICH DEALS WITH THE 'SALE OF
GOODS' WHEREAS THE CGST ACT, 2017 DEALS WITH
TAX ON 'SUPPLY OF GOODS'. THUS, THE
DEFINITION OF TERM 'GOODS' CAN BE REFERRED
TO FROM THE SALE OF GOODS ACT, 1930 FOR THE
PURPOSE OF SECTION 194Q.

6. GOODS MEANS
• MOVABLE PROPERTY
• ANY COMMODITY
• SHARES OR SECURITIES
• ELECTRICITY
• AGRICULTURE PRODUCE
• FUEL
• MOTOR VEHICLE
• LIQUOR
• JEWELLERY OR BULLION
• ART OR DRAWINGS
• SCULPTURES
• SCRAPS
• FOREST PRODUCE, ETC.
• SOFTWARE

7. WHETHER PAYMENT OF ADVANCE BEFORE 01-07-
2021 FOR PURCHASE OF GOODS WILL BE SUBJECT
TO TDS?
IN SIMPLE WORDS, THE TAX SHOULD BE
DEDUCTED WHERE THE PAYMENT IS MADE, OR
AMOUNT IS CREDITED ON OR AFTER 01-07-2021.
THUS, WHERE ANY OF THE TRIGGER EVENT (I.E.,
PAYMENT OR CREDIT) HAS OCCURRED BEFORE
THE DATE OF APPLICABILITY OF PROVISION, NO
LIABILITY TO DEDUCT TAX WILL ARISE.

8. WHEN TO DEDUCT
- CREDIT OF SUCH SUM TO THE ACCOUNT OF
SELLER OR
- PA
YMENTTO SELLER
(WHICHEVER is EARLIER)
RATE OF DEDUCTION
- AMOUNT EQUALTO 0.1 % OF SUM EXCEEDING 50
LACS

9. NOTAPPLICABLE TO:-
OF THE
- WHERE TAX IS DEDUCTIBLE UNDER ANY
PROVISIONS OF THIS ACT
- TAX IS COLLECTIBLE UNDER THE PROVISIONS OF
206C OTHER THAN A TRANSACTION TO WHICH
SUB-SECTION (1H) OF SECTION 206C APPLIES

10. WHETHERON THEVALUEEXCLUDING GST
OR
ONVALUE INCLUDING GST

11. CONSEQUENCES OF NON-DEDUCTION
AMOUNT DISALLOWED U/S 40(a)(ia)
“THIRTY PER CENT OF ANY SUM PAYABLE TO A
RESIDENT, ON WHICH TAX IS DEDUCTIBLE AT
SOURCE UNDER CHAPTER XVII- B AND SUCH TAX
HAS NOT BEEN DEDUCTED OR, AFTER
DEDUCTION, HAS NOT BEEN PAID ON OR BEFORE
THE DUE DATE SPECIFIED IN SUB-SECTION (1) OF
SECTION 139”

12. IF TDS IS BEING DEDUCTED UNDER SECTION 194Q BY
BUYER WHETHER SELLER WILL BE LIABLE TO
COLLECTTCS

13. CASE STUDIES
BUYER TURNOVER :- 13 CRORES (PREVIOUS YEAR)
(PREVIOUS YEAR)
SELLER TURNOVER :- 8 CRORES SELLER
PAN AVAILABLE
BUYER PAN AVAILABLE
TOTAL TRANSACTION VALUE/ RECEIPTS -55 LACS
AMOUNT ON WHICH IS TAX IS DEDUCTED/
COLLECTED - ?
RATE - ? REASON - ?

14. AMOUNT ON WHICH TAX IS TO BE DEDUCTED: 5
LACS
TDS TO BE DEDUCTED @0.1% BY BUYER U/S 194Q
REASON:-
IT IS OUT OF SCOPE OF SECTION 206C(1H) AS
SELLER TURNOVER IS LESS THAN 10 CRORES

15. CASE STUDIES
BUYER TURNOVER :-9 CRORES (PREVIOUS YEAR)
SELLER TURNOVER :- 15 CRORES (PREVIOUS YEAR)
SELLER PAN : AVAILABLE
BUYER PAN : AVAILABLE
TOTAL TRANSACTION VALUE/ RECEIPTS -58 LACS
AMOUNT ON WHICH TAX IS DEDUCTED/
COLLECTED - ?
RATE - ? REASON - ?

16. AMOUNT ON WHICH TAX IS TO BE COLLECTED:
8 LACS
TCS TO BE COLLECTED @0.1% BY SELLER U/S
206C(1H)
REASON:-
IT IS OUT OF SCOPE OF SECTION 194Q AS BUYER
TURNOVER IS LESS THAN 10 CRORES

17. CASE STUDIES
BUYER TURNOVER :- 19 CRORES (PREVIOUS YEAR)
SELLER TURNOVER :- 15 CRORES (PREVIOUS YEAR)
SELLER PAN : AVAILABLE
BUYER PAN : AVAILABLE
TOTAL TRANSACTION VALUE/ RECEIPTS - 60 LACS
AMOUNT ON WHICH IS TAX IS DEDUCTED/
COLLECTED - ?
RATE - ? REASON - ?

18. AMOUNT ON WHICH TAX IS TO BE DEDUCTED: 10
LACS
TDS TO BE DEDUCTED @0.1% BY BUYER U/S 194Q
REASON:-
IT IS OUT OF SCOPE OF SECTION 206C(1H) AS
SPECIFIC EXLCUSION IS PROVIDED IN SECTION

19. CASE STUDIES
BUYER TURNOVER :- 19 CRORES (PREVIOUS YEAR)
SELLER TURNOVER :- 5 CRORES (PREVIOUS YEAR)
SELLER PAN : NOT AVAILABLE
BUYER PAN : AVAILABLE
TOTAL TRANSACTION VALUE/ RECEIPTS -60 LACS
AMOUNT ON WHICH IS TAX IS DEDUCTED/
COLLECTED - ?
RATE - ? REASON - ?

20. AMOUNT ON WHICH TAX IS TO BE DEDUCTED: 10
LACS
TDS TO BE DEDUCTED @5 % BY BUYER U/S 194Q
REASON:-
IT IS OUT OF SCOPE OF SECTION 206C(1H) AND
SECTION 206AA COMES INTO PLAY

21. CASE STUDIES
BUYER TURNOVER :- 9 CRORES (PREVIOUS YEAR)
SELLER TURNOVER :- 15 CRORES (PREVIOUS YEAR)
SELLER PAN : AVAILABLE
BUYER PAN : NOT AVAILABLE
TOTAL TRANSACTION VALUE/ RECEIPTS -60 LACS
AMOUNT ON WHICH IS TAX IS DEDUCTED/
COLLECTED - ?
RATE - ? REASON - ?

22. AMOUNTON WHICH TAX IS TO BE DEDUCTED: 10 LACS
TCS TO BE COLLECTED @ 1 % BY SELLER U/S 206C(1H)
REASON:-
IT IS OUT OF SCOPE OF SECTION 194Q AS BUYER
TURNOVER IS LESS THAN 10 CRORES AND SECTION
206CC COMES INTO PLAY FOR HIGHER DEDUCTION

23. CASE STUDIES
BUYER TURNOVER :- 19 CRORES (PREVIOUS YEAR)
SELLER TURNOVER :- 15 CRORES (PREVIOUS YEAR)
BUYER/SELLER PAN ARE AVAILABLE
TOTAL TRANSACTION VALUE/ RECEIPTS - 100 LACS
TDS NOT DEDUCTED BYTHE BUYER IN THE
PREVIOUS YEAR AND BEFORE THE DUE DATE OF
FILING RETURN U/S 139(1)
DISALLOWANCE AMOUNT - ?

24. DISALLOWANCE U/S 40(a)(ia)
30% OF THE AMOUNT ON WHICH TAX IS NOT
DEDUCTED
TAXTO BE DEDUCTED : Rs. 5000/-
Disallowed Amount : Rs. 15 Lacs

25. 206AB-Special provision fordeductionof taxatsource
fornon-filersof income-taxreturn.
NotApplicabletoWheretax isrequired to bededucted u/s
192 – T
axdeduction from Salary
192A – TDS fromwithdrawal from EPF Scheme
194B – TDS fromwinning from lotteriesorcrossword
puzzles
194BB – TDS fromwinning from horserace
194LBC – TDS from income inrespectof Investment in
Securitizationfund
194N – TDSoncertainamountof paymentin Cash

26. ● Whenamount ispaid , payableorcredited toa
specified person.
● Taxto bedeductedat higherof the following
● attwicetheratespecified in therelevantprovisionof
theAct; or
● attwice therateorrates in force; or
● attherateof fivepercent..

27. ● Meaning of Specified Person
● apersonwho has not filed thereturnsof income
● for both of the two assessmentyears relevant to the two previous
years
● immediately prior to the previous year in which tax is required to
be deducted, for which the time limit of filing return of income
undersub-section (1) of section 139 hasexpired;
● and theaggregateof taxdeducted atsourceand taxcollected at
source in his case is rupees fifty thousand or more in each of
thesetwopreviousyears:
● Provided that the specified person shall not include a non-
residentwhodoes not haveapermanentestablishment in India

28. IF PAN IS NOT AVAILABLE THE ATWHAT RATE TAX
TO BE DEDUCTED
?

29. ●If the provisions of section 206AA is
applicabletoaspecified person, inaddition
totheprovisionof thissection, the taxshall
bededucted at higherof the tworates
provided in this section and in section
206AA.

30. ● Case Study
● Acompany has todeduct tax u/s 194Cof an individual
(notcovered underaudit) on 01/07/2021
● Whatshould bethecheck list
?

31. ● Whether he has filed his ITR for 2018-19AYand 2019-
20 AY.
● Whether his tax deducted at source or tax collected at
source was in aggregate more than Rs. 50 thousand in
both theyears.
Whetherwewill havetotake hiscopyof ITR and form
26AS. ?

32. ● 206CCA-Special provision forcollection of taxat
sourcefornon-filersof income-taxreturn.
● Notwithstanding anything contained in any other
provisions of this Act, where tax is required to be
collected at source under the provisions of Chapter
XVII-BB,onanysumoramountreceived byaperson
(hereafter referred to as collectee) from a specified
person, the taxshall becollected at the higherof the
following tworates, namely:––

33. ● attwice theratespecified in therelevantprovisionof
theAct; or
● attherateof fivepercent.
IF PAN IS NOT AVAILABLE
If the provisions of section 206CC is applicable to a
specified person, in addition to the provisions of this
section, thetaxshall becollected at higherof thetworates
provided in thissectionand insection 206CC.

34. ● Meaning of Specified Person
● apersonwho has not filed thereturnsof income
● for both of the two assessmentyears relevant to the two previous
years
● immediately prior to the previous year in which tax is required to
be deducted, for which the time limit of filing return of income
undersub-section (1) of section 139 hasexpired;
● and theaggregateof taxdeducted atsourceand taxcollected at
source in his case is rupees fifty thousand or more in each of
thesetwopreviousyears:
● Provided that the specified person shall not include a non-
residentwhodoes not haveapermanentestablishment in India