Section 194Q of Income Tax Act
Section 194Q of the Income Tax Act, introduced in the Union Budget 2021 and effective from 1st July 2021, is a provision that specifically applies to buyers making payments to resident sellers for the purchase of goods.
To visit:https://www.incometax.gov.in
According to this provision, if a buyer makes payments exceeding Rs. 50 lakh to a resident seller for the purchase of goods within a financial year, the buyer is require to deduct tax at source (TDS) at a rate of 0.1% on the amount exceeding Rs. 50 lakh.
However, if the seller has already deducted TDS under any other provision of the act, the buyer is not obligate to deduct TDS under section 194Q.
The primary objectives of this provision are to broaden the tax base and ensure that sellers fulfill their tax obligations on the sale of goods. Additionally. It aims to simplify tax compliance for small taxpayers by exempting them from the TDS provisions.
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