Microlesson · 5-min read

Section 194Q — Purchase of Goods

# Section 194Q — TDS by Buyer on Purchase of Goods

## Who deducts?

Buyer whose total sales / gross receipts / turnover in the immediately preceding FY exceeds ₹10 crore.

## Payee

Resident seller.

## Threshold

Purchases from a seller > ₹50,00,000 in the FY.

## Rate

0.1% of the excess over ₹50 lakh.

## If PAN not furnished by seller

TDS @ 5% (instead of 0.1%) per Sec 206AA.

## Interaction with TCS u/s 206C(1H)

If both 194Q (buyer) and 206C(1H) (seller) apply on the same transaction, 194Q (TDS) prevails — buyer deducts TDS, seller does not collect TCS.

Worked example

### Example 1

Example: Buyer Co. (turnover ₹50 cr last year) purchases ₹80 lakh of goods from Seller X in FY. TDS u/s 194Q = 0.1% × (80 L − 50 L) = ₹3,000.

### Example 2

Example: Same facts; Seller X has no PAN — TDS @ 5% × ₹30 L = ₹1,50,000.

Deducting on the full purchase value rather than only on the excess over ₹50 lakh.
Both buyer deducting under 194Q and seller collecting under 206C(1H) on same transaction — 194Q overrides.

Reference: 194Q

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