MANU/DTCR/0014/2021

Ministry : Ministry of Finance

Department/Board : CBDT

Circular No. : 13/2021

Date : 30.06.2021

Notification/ Circulars Referred : Circular no. 17 of 2020 dated 29th Sept 2020 MANU/DTCR/0018/2020;Circular no. 23 of 2017 dated 19th July 2017 MANU/DTCR/0024/2017

Citing Reference:
Circular no. 17 of 2020 dated 29th Sept 2020 MANU/DTCR/0018/2020  Referred

Circular no. 23 of 2017 dated 19th July 2017 MANU/DTCR/0024/2017  Referred

Guidelines under Section 194Q of the Income-Tax Act 1961

Finance Act, 2021 inserted a new section 194Q in the Income-tax Act 1961 (hereinafter referred to as "the Act") which takes effect from 1st day of July, 2021. It applies to any buyer who is responsible for paying any sum to any resident seller for purchase of any goods of the value or aggregate of value exceeding fifty lakh rupees in any previous year. The buyer, at the time of credit of such sum to the account of the seller or at the time of payment whichever is earlier, is required to deduct an amount equal to 0.1% of such sum exceeding fifty lakh rupees as income tax.

2. Buyer is defined to be person whose total sales or gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the purchase of good is carried out. Central Government has been authorised to specify by notification in the Official Gazette, person who would not be considered as buyer for the purposes of this section.

3. Sub-section (3) of section 194Q of the Act empowers the Board (with the approval of the Central Government) to issue guidelines for the purpose of removing difficulties. Various representations have been received by the Board for issuing guidelines for removing certain difficulties. In exercise of power contained under sub-section (3) of section 194Q of the Act, the Board, with the approval of the Central Government, hereby issues the following guidelines. These guidelines at some places have also tried to remove difficulties in implementing the provisions of section 194-O and sub-section (1H) of section 206C of the Act using power contained in sub-section (4) of section