taxes

Should I apply TCS to my transaction as per Section 206C1(H) or should my customer apply TDS according to Section 194Q?

You might be confused as to which Section (206C1(H) or 194Q) to apply to your transaction if:

your turnover and the buyer’s turnover exceeds 10 Crores.
the sale amount is greater than 50 Lakhs.

In such cases, your customer must apply TDS according to Section 194Q as per the latest circular released by the Central Board of Direct Taxes. If your customer has applied TDS as per Section 194Q to a transaction, you do not have to apply TCS as per Section 206C1(H) to the same transaction.

However, if you have already applied the TCS as per Section 206C1(H) to a transaction before the customer could apply TDS as per Section 194Q, customers do not have apply TDS according to Section 194Q to the same transaction.

You can also preview your invoice payment to check if your customer has already applied TDS according to Section 194Q. If the customer has not applied TDS as per Section 194Q to transaction, you can go ahead and apply TCS as per Section 2061(H) to the transaction.

Let’s take a look at a few examples down below to know when to apply TDS according to section 194Q:

Customer’s Turnover	Vendor’s Turnover	Sales Amount	Apply Section 194Q	Apply Section 206C 1H
9 Cr	15 Cr	55 Lakhs	Not Applicable (Buyer’s turnover is not > 9 Cr)	Applicable
15 Cr	9 Cr	55 Lakhs	Applicable	Not Applicable (Seller’s turnover < 10 Crore)
15 Cr	15 Cr	55 Lakhs	Applicable	Not Applicable (As Section 194Q has already been deducted)
15 Cr	15 Cr	55 Lakhs	Not Applicable (As Buyer has failed to deduct TCS)	Applicable

Was this document helpful?

Yes

Let us know where we can improve

By clicking Submit, you agree to our Privacy Policy .

Thank you for your feedback!

Want a feature?

Suggest