TuriaToolkit

Section 194Q vs 206C(1H) Goods TDS/TCS Matrix

Precedence EngineCBDT Cir 13/2021

Resolve Buyer (194Q) vs Seller (206C(1H)) turnover conflicts on goods > ₹50 Lakhs with automated bilateral declarations.

1. Preceding Financial Year Turnovers

2. Transaction Consideration

Statutory threshold: First ₹50,00,000 is fully exempt.

3. Entity Names for Declaration

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Statutory & Compliance Disclaimer

This tool is an automated calculation, formatting, and compliance aid provided for informational purposes only. It does not constitute formal legal, taxation, or professional auditing advice. Calculations, citations, and draft documents must be independently verified by a qualified Chartered Accountant (CA) or Company Secretary (CS) against statutory provisions and applicable ICAI/ICSI guidelines before execution or certification.

Statutory Determination

Section 194Q Applies — Buyer Must Deduct TDS

Buyer's turnover exceeded ₹10 Crores in the preceding FY. As per CBDT Circular No. 13/2021 and the second proviso to Section 206C(1H), Section 194Q takes statutory precedence. Buyer must deduct TDS. Seller shall NOT collect TCS.

Tax Deductible / Collectible

₹2,500

@ 0.1% on ₹25,00,000

Tax Base & Rate Computation

Aggregate Value of Goods in Current FY₹75,00,000
Less: Statutory Basic Exemption Threshold-₹50,00,000
Net Taxable Consideration (Subject to TDS/TCS)₹25,00,000
Applicable Tax Rate (Normal)0.1%
Total Tax Payable₹2,500

Recommended Accounting Journal Entries

In Buyer's Books (Acme Enterprises Pvt Ltd)

Purchase A/c            Dr. ₹75,00,000

  To Zenith Industrial Supplies LLP A/c        Cr. ₹74,97,500

  To TDS Payable u/s 194Q  Cr. ₹2,500

In Seller's Books (Zenith Industrial Supplies LLP)

Acme Enterprises Pvt Ltd A/c         Dr. ₹75,00,000

  To Sales A/c             Cr. ₹75,00,000

Bilateral Statutory Declaration / Intimation Letter

Date: 16/9/2026

To,
Zenith Industrial Supplies LLP

Subject: Declaration regarding TDS deduction under Section 194Q of Income-tax Act, 1961

Dear Sir/Madam,

This is to confirm that our total sales/gross receipts/turnover from business in the preceding financial year exceeded ₹10 Crores. 

Consequently, in terms of Section 194Q of the Income-tax Act, 1961 read with CBDT Circular No. 13/2021, we (Acme Enterprises Pvt Ltd) are liable to deduct Tax at Source (TDS) @ 0.1% on all purchases of goods from you exceeding ₹50,00,000 during the current financial year.

In accordance with the second proviso to Section 206C(1H), since we are deducting tax under Section 194Q, you are requested NOT to collect Tax Collection at Source (TCS) u/s 206C(1H) on your invoices or receipts from us.

Thanking you,
Yours faithfully,
For Acme Enterprises Pvt Ltd

Authorized Signatory