Section 206C(1H) inserted by the Finance Act, 2020 mandates the tax collection at source by the seller of goods if it exceeds Rs. 50 lacs in any previous year.
Similarly section 194Q has been inserted on the similar grounds by the Finance Act, 2021 provides the tax deduction by the buyer on purchase of goods exceeding Rs. 50 lacs which has become applicable wef 01.07.2021.
Section 194Q becomes applicable to any person (Buyer) who is responsible for paying sum to any resident (Seller) for purchase of goods of the aggregate value exceeding Rs. 50 lacs in any previous year. The buyer shall at the time of making such payment/credit whichever is earlier deduct an amount equal to 0.1 percent of such sum exceeding fifty lacs rupees.
The above provisions are not applicable to all buyers but the buyer has been defined as a person whose total sales or gross receipts from the business exceeds Rs. 10 Crore during the financial yea immediately preceding to the financial year in which the purchase has been made.
Applicability to the Non Residents
CBDT has clarified that the provisions of Section 194Q shall not be applicable to a non resident who does not have any permanent establishment in India.
What if the provisions of Section 206C(1H) and Section 194Q becomes applicable simultaneously
In case of simultaneous applicability of both the sections Section 194Q shall prevail but in case the tax has not been deducted under section 194Q seller shall be liable to collect the tax.
To view the CBDT circular click on the below link;
https://incometaxindia.gov.in/communications/circular/circular_13_2021.pdf