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Question ID : 41096

194Q Query

New section 194Q is inserted in Income Tax Act for deduction of TDS on purchase of goods and applicable from 01/07/2021. Regarding to this new section, I have one query: "A person has , let's say Mr A, turnover above 10 Crore in AY 2021-22. He is a trader in the gram market. Mr A buys goods from agent i.e. Kacha Adatiya. This agent acquires goods from the different farmers in the gram market. Agent issues a sale bill to Mr A in which he charges the cost of the goods, commission and GST. Mr A does not know who the actual seller is, he only knows the agent. The Agent reports only commission income in his books of account and the cost of the goods he charges in the bill gets adjusted against the farmer's payment. Hence, the cost of goods is not a turnover/sale income for him. Now my question is from view point of buyer i.e. Mr A: "Whether he is required to deduct TDS u/s 194Q on cost of goods paid to the agent? He already deducts TDS u/s 194H on commission paid to the agent." I hope my query is clear to you. Waiting for your quick reply.

Posted by SONAL MANUBHAI GOYAL on Jul 14, 2021

Filed Under TDS/TCS

Answer ID : 81201

If you are making payment for the cost of goods also to the agent then it will be considered as purchases from agent itself and not from farmers. It it better to pay the cost of goods to farmers directly and there will be no TDS required as it is exempt income for farmers.

Posted by VINAY BHARGAV KUMAR G on Jul 20, 2021