Section 194Q TDS Deduction on Purchase of Goods: Complete Accounting SOP
Section 194Q TDS Deduction on Purchase of Goods: Complete Accounting SOP
In-depth Income Tax SOP for accountants on Section 194Q TDS compliance, ₹50 Lakh threshold calculations, GST exclusion rules, and Tally purchase vouchers.
Who is this for: Income Tax TDS SOP
Quick Answer: How Does Section 194Q TDS on Purchase of Goods Work?
Buyers with prior-year turnover > ₹10 Crore must deduct 0.1% TDS on purchase of goods exceeding ₹50 Lakhs from a single resident vendor in a fiscal year. TDS is deducted on the net taxable purchase value excluding GST (when itemized separately) at the time of credit or payment, whichever is earlier.
- Buyer turnover threshold: > ₹10 Crore in preceding financial year.
- Single seller purchase threshold: > ₹50 Lakhs aggregate in current financial year.
- Standard TDS rate: 0.1% on excess over ₹50L (5% rate if seller PAN is invalid).
- TDS is calculated on net purchase amount excluding separately itemized GST.
1. Key Statutory Parameters of Section 194Q
Applicable Buyer Threshold
Total business turnover/gross receipts > ₹10 Crore in preceding financial year.
Transaction Cutoff Limit
Aggregate purchase of goods > ₹50 Lakhs from a single resident seller in current FY.
Timing of Deduction
Deduct at time of credit to seller account OR payment date, whichever occurs earlier.
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