Tax Tool / TDS Calculator

Section 194Q TDS Purchase Payment Deduction Calculator (2026)

Calculate 0.1% TDS deduction under Section 194Q / Section 393 on purchase of goods exceeding ₹50 Lakh. Learn Tally Prime entry setup, GST exclusion rules, and Form 26Q filing.

Quick Answer: How Does Section 194Q TDS Work on Purchase of Goods?

Section 194Q requires buyers with prior year turnover > ₹10 Crore to deduct 0.1% TDS on purchase of goods exceeding ₹50 Lakh from a single resident seller in a financial year. TDS is deducted on the excess amount (excluding GST if billed separately) at the time of credit or payment, whichever is earlier.

  • Applies to buyers with previous FY turnover > ₹10 Crore.
  • TDS rate: 0.1% on purchase amount exceeding ₹50 Lakh (5% if no PAN).
  • GST is excluded from TDS calculation if indicated separately on the invoice.
  • Section 206C(1H) TCS was abolished; buyer Section 194Q TDS is the primary rule.

Section 194Q TDS Calculation Examples (0.1% vs 5%)

Purchase ScenarioTaxable ExcessTDS RateTDS Amount Payable
Purchase ₹40 Lakh from Seller ABelow ₹50 L0.1%₹0 (No TDS)
Purchase ₹70 Lakh from Seller B (with PAN)Exceeds by ₹20 L0.1%₹2,000
Purchase ₹1 Crore from Seller C (with PAN)Exceeds by ₹50 L0.1%₹5,000
Purchase ₹60 Lakh from Seller D (No PAN)Exceeds by ₹10 L5.0% (Sec 206AA)₹50,000

How to Setup Section 194Q in Tally Prime (Step-by-Step)

1
Enable TDS in F11 Features

Go to F11 > Statutory & Taxation > Enable Tax Deducted at Source (TDS) > Set to Yes.

2
Create TDS Nature of Payment

Create Master > TDS Nature of Payments > Section: 194Q / 393 > Rate: 0.1% > Threshold Exemption: ₹50,00,000.

3
Configure Party & Purchase Ledgers

In Party Ledger: Set 'Is TDS Deductible: Yes'. In Purchase Ledger: Set 'Is TDS Applicable: Applicable' and link 194Q Nature of Payment.

4
Pass Purchase / Payment Entry

Tally auto-calculates 0.1% TDS when total purchase crosses ₹50 Lakh. For advance payments, pass F5 Payment + Alt+J Stat Adjustment.

Automate Section 194Q Purchase Entries in Tally Prime

Post verified vendor bills with automatic 0.1% TDS calculation in 15 seconds.

TrulyInvoice AI extracts vendor GSTINs, taxable purchase amounts, and GST components from PDF bills. It calculates 0.1% TDS on amounts exceeding ₹50 Lakh and syncs clean F9 Purchase Vouchers directly to Tally Prime.

Frequently Asked Questions

What are the applicability conditions for Section 194Q TDS on purchase of goods?▾
Section 194Q applies if: (1) The buyer's total turnover in the preceding financial year exceeded ₹10 Crore, and (2) The aggregate purchase of goods from a single seller exceeds ₹50 Lakh in the current financial year. TDS rate is 0.1% on the amount exceeding ₹50 Lakh.
Is GST included when calculating TDS under Section 194Q?▾
No. If GST is indicated separately in the supplier's invoice, TDS under Section 194Q is calculated on the taxable value EXCLUDING GST. However, if advance payment is made before invoice issuance, TDS is deducted on the full advance amount.
What happens if the seller does not furnish a PAN card?▾
If the seller fails to provide a valid PAN card, the TDS deduction rate under Section 194Q increases from 0.1% to 5% under Section 206AA.
What is the status of Section 206C(1H) TCS vs Section 194Q TDS in 2026?▾
Section 206C(1H) seller-side TCS was officially abolished. Section 194Q (restructured under Section 393 in the Income-tax Act 2025) is the primary governing rule. Buyers are solely responsible for 0.1% TDS deduction.
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