BooksIQBuyers whose turnover crossed ₹10 Cr in the previous financial year must deduct TDS at 0.1% on goods purchased from a resident seller, on the value above ₹50,00,000 per seller per FY.
Key points
- The deductor is the buyer — but only where their gross receipts, turnover, or sales from business exceeded ₹10 Cr in the immediately preceding FY.
- The rate is 0.1%, raised to 5% where the deductee has not furnished PAN (via §206AA).
- The threshold applies to the value of purchases EXCEEDING ₹50 lakh per seller in the FY — so on a ₹60 lakh purchase, TDS is computed on the ₹10 lakh excess, not the full amount.
- There is an important interaction with §206C(1H): if the seller is already collecting TCS at 0.1% on the same transaction, §194Q prevails (the buyer's TDS applies);
- if the buyer has not deducted under §194Q despite being liable, the seller's §206C(1H) collection applies instead.
- Both never apply simultaneously.
Reference: §194Q, ITA 1961 — under ITA 2025 (FY 26-27 onwards), this is §393(1) Sl.8(ii)
This page is general information for Indian businesses, current as of the
financial year shown above — not legal or tax advice. Tax law changes,
and how a provision applies depends on your specific facts. Confirm the
current position with a qualified professional before you act.
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