TDS on Purchase of Goods: Section 194Q Threshold and Rules | FinTax24

TL;DR

Section 194Q requires a buyer whose total turnover exceeded ₹10 crore in the immediately preceding financial year to deduct TDS at 0.1% on purchases of goods from a resident seller once the buyer’s aggregate purchase from that seller crosses ₹50 lakh in the financial year. TDS is computed on the amount in excess of ₹50,000, deducted at credit or payment, deposited by the 7th of the next month under Challan 281, and reported in Form 26Q with Form 16A issued to the seller. Goods imported under the Customs Act, capital-market securities and e-commerce transactions under Section 194-O are excluded; Section 206AA raises the rate to 5% when the seller does not furnish PAN.

A Surat textile trader, an Ahmedabad fastener manufacturer, or a Rajkot engineering goods dealer that crosses the ₹10 crore turnover line moves into Section 194Q territory from the very next financial year — and the obligation is independent of GST, profit, or whether the seller is registered under GST. This article is the operational guide for Gujarat businesses and finance teams: who must deduct, when the threshold is breached, what the rate applies to, how it interacts with GST, and the mistakes that routinely trigger Section 201 deemed assessee notices.

Quick Answer

When does a business have to deduct TDS under Section 194Q? A buyer (company, firm, LLP, AOP, BOI, trust, individual carrying on business) must deduct Section 194Q TDS when all three conditions are met:

1. The buyer’s total turnover (including exports and exempt supplies, but generally excluding GST) in the immediately preceding financial year exceeded ₹10 crore.
2. The buyer is purchasing goods from a resident seller (the section does not apply to imports under the Customs Act or to non-resident sellers).
3. The buyer’s aggregate value of purchase from that specific seller (PAN-wise) in the current financial year exceeds ₹50,000.

When the conditions are met, the buyer deducts 0.1% TDS on the amount in excess of ₹50 lakh, at the earlier of credit or payment, deposits the TDS by the 7th of the next month, files Form 26Q quarterly, and issues Form 16A to the seller.

Parameter	Rule
Section	194Q of the Income Tax Act, 1961
Effective from	1 July 2021 (introduced by Finance Act 2021)
Buyer turnover threshold	Exceeding ₹10 crore in the immediately preceding FY
Purchase threshold	Aggregate purchase from a single seller (PAN) exceeding ₹50 lakh in the current FY
TDS rate	0.1% on the value of purchase exceeding ₹50 lakh
Higher rate if no PAN	5% under Section 206AA
Time of deduction	Earlier of credit to the seller’s account or actual payment
Deposit	By the 7th of the month following deduction, under Challan 281
TDS return	Form 26Q (quarterly)
TDS certificate	Form 16A (within 15 days of the due date of Form 26Q)
Excluded transactions	Goods imported under Customs Act, 1962; capital-market securities; transactions covered by Section 194-O (e-commerce)

What Section 194Q Actually Says

Section 194Q was inserted by the Finance Act, 2021 with effect from 1 July 2021 to shift the tax-withholding burden from sellers (under the now-withdrawn Section 206C(1H)) to buyers. The provision reads simply, but the surrounding conditions are where most disputes arise.

The text of the section obliges a buyer, whose total turnover in the preceding financial year exceeds ₹10 crore, to deduct tax at source — at the rate specified — on the amount credited or paid, in excess of ₹50 lakh, for purchase of goods from a resident seller in a financial year.

The key engineering inside the section is:

• “Turnover exceeding ₹10 crore” — The section uses “turnover” and not “gross receipts”, aligning broadly with the GST-style aggregate turnover definition under Section 2(6) of the CGST Act. For a Gujarat textile trader this includes domestic sales, export sales, inter-state and intra-state supplies. For non-GST businesses the interpretation falls back on the Explanation to Section 194Q and accepted accounting practice.
• “Aggregate value of purchase from a seller exceeds ₹50 lakh” — Computed per seller PAN in a financial year. Two sellers in the same group but holding different PANs are separate for this purpose. This rule is per-PAN, not per-invoice.
• “In excess of ₹50 lakh” — TDS is not on the entire purchase value; it is on the amount exceeding ₹50 lakh. This is a frequent source of error: a buyer deducting 0.1% on the full invoice instead of the excess above the threshold.
• “Goods” — Defined in ordinary commercial sense (movable property). It does not include actionable claims, securities, or immovable property.

What Section 194Q Excludes

The section carves out specific transactions where another withholding or collection provision already applies, or where the basic premise of buyer-and-resident-seller does not hold:

Excluded transaction	Applicable provision / reason
Goods imported under the Customs Act, 1962	TDS under Section 196 read with Rule 37BA of the Income Tax Rules
Transactions in securities (shares, debentures, units, derivatives)	No buyer-side TDS; capital gains framework applies on sale
Auction purchases under Chapter VI of the Finance (No. 2) Act, 2004 (forest timber, etc.)	TDS under Section 194-O of the Finance Act 2004
Transactions through an e-commerce operator where Section 194-O applies	E-commerce operator is the deductor under Section 194-O
Goods purchased from a non-resident seller	TDS under Section 195 (different procedural chain)
Goods purchased by a non-resident buyer	Section 194Q applies only to resident buyers

CBDT Circular No. 13/2021 dated 30 June 2021 clarified several of these boundaries — most importantly that Section 194-O overrides Section 194Q when an e-commerce operator is in the picture. A Surat trader selling on an e-commerce marketplace, with the platform as the intermediary, will see Section 194-O deducted by the platform — not 194Q by the trader as buyer.

Why Section 194Q Matters for Gujarat Businesses

Three Gujarat-specific patterns make Section 194Q a high-priority operational question:

1. Trading-heavy geography. Surat’s man-made fibre and textile traders, Ahmedabad’s commodity wholesalers, Rajkot’s machinery and auto-parts dealers, and Jamnagar’s brass parts traders typically cross ₹10 crore turnover between their second and fourth operating year. The transition is sudden: a business under ₹10 crore last year but over ₹10 crore this year is not a deductor for the current year; the deductor obligation triggers only from the next financial year.
2. Inter-state purchases dominate. Gujarat is a net-importer of certain raw materials (chemicals from Bharuch and Ankleshwar for downstream industries, agro commodities, ferrous metals). Many of these purchases are inter-state, but Section 194Q does not distinguish inter-state and intra-state — both are subject to the section if the seller is resident in India.
3. GST registration is independent. A GST-registered buyer must deduct TDS under Section 194Q; an unregistered buyer above the ₹10 crore turnover threshold must also deduct TDS. Conversely, an unregistered seller does not escape the buyer’s TDS obligation — the buyer is the deductor.

A common issue we see is a textile trader in Surat who crosses ₹10 crore in FY 2025-26 but believes Section 194Q starts “this year itself”. It does not. The deduction obligation crystallises only from FY 2026-27 onwards, and only if FY 2026-27 purchases from any seller PAN cross ₹50 lakh. The compliance clock for FY 2025-26 is silent on Section 194Q.

Interaction with GST — The Practical Confusion

This is the area most often mis-handled in practice, so it deserves a dedicated note.

Section 194Q operates on the value of purchase of goods. GST is governed by a separate law. The two are reconciled as follows:

• If GST is shown separately on the invoice — TDS under Section 194Q is computed on the invoice value excluding GST and any compensation cess. This mirrors the rule for TDS on most other payment categories.
• If the invoice is silent on GST or shows an inclusive figure — the deductor must back out the applicable GST component before computing TDS. A useful approach for a Gujarat buyer is to compute the GST component at the same rate as the seller’s GST rate (5%, 12%, 18%, 28% or specific textiles rate), and apply 0.1% on the pre-GST value.
• Reverse charge purchases under GST (e.g., purchases from an unregistered supplier attracting RCM, or specific notified categories) — Section 194Q still applies on the purchase value. The buyer pays the seller the gross invoice (less Section 194Q TDS) and separately discharges the GST RCM liability. The two are not netted.

A concrete example for Surat: a man-made fabric trader buys polyester filament yarn worth ₹55 lakh + 18% GST = ₹64,90,000 from a Mumbai-based seller in FY 2026-27. The buyer’s FY 2025-26 turnover was ₹14 crore. The deductible TDS value is the pre-GST amount (₹55 lakh). Since aggregate purchases from this seller in FY 2026-27 exceed ₹50 lakh, TDS applies on the amount in excess of ₹50 lakh — i.e., ₹5,00,000 × 0.1% = ₹500. The buyer deposits ₹500 in the government account under challan 281 (TDS section code 194Q), pays the seller ₹64,89,500, and raises no GST question on the TDS side.

The ITC available to the buyer on the GST invoice is unaffected by Section 194Q. ITC is governed by Section 16 of the CGST Act and the conditions in the ITC guide on FinTax24; the TDS deduction does not modify ITC eligibility.

Worked Examples

The examples below use FY 2026-27 as the current financial year and FY 2025-26 as the preceding financial year. All assume the buyer is a resident company with a valid TAN, and that the seller has furnished a PAN.

Example 1: Standard textile purchase above threshold

ABC Fabrics Pvt Ltd, a Surat-based MMF trader, has an FY 2025-26 turnover of ₹14.50 crore. In FY 2026-27, it purchases grey fabric from XYZ Looms Pvt Ltd (same Surat):

• April 2026: ₹10 lakh
• May 2026: ₹12 lakh
• June 2026: ₹14 lakh
• July 2026: ₹18 lakh — aggregate ₹54 lakh

Step at end of July: aggregate crosses ₹50 lakh. The first ₹50 lakh attracts no Section 194Q TDS. TDS applies on the excess of ₹4 lakh (₹54 lakh − ₹50 lakh).

• TDS = 0.1% × ₹4,00,000 = ₹400
• Deduction event: at the time of credit (when entries hit the books) or payment, whichever is earlier
• Deposit by: 7 August 2026 under challan 281 with section code 194Q
• August 2026 purchase of ₹15 lakh: aggregate ₹69 lakh, excess ₹19 lakh
• TDS = 0.1% × ₹19,00,000 = ₹1,900

The cumulative TDS for the quarter (Q2: July–Sep 2026) is reported in Form 26Q, due 31 October 2026.

Example 2: Buyer turnover threshold not crossed

DEF Polymers LLP, an Ahmedabad-based polymer distributor, has an FY 2025-26 turnover of ₹9.20 crore. Even though FY 2026-27 purchases from a single supplier may exceed ₹50 lakh, the Section 194Q deductor condition on buyer turnover is not met:

• No Section 194Q TDS obligation for FY 2026-27, regardless of purchase value
• For FY 2027-28, if turnover exceeds ₹10 crore, Section 194Q applies from the very first purchase in FY 2027-28 that takes the aggregate above ₹50 lakh

This is the most common miss in the other direction: businesses that should be deducting are not.

Example 3: Multiple sellers, same PAN group

A diamond cutting unit in Surat purchases rough diamonds from a Surat-based entity that operates two distinct legal entities — entities A and B — with separate PANs. The buyer must compute the ₹50 lakh threshold separately for A and for B. If the buyer purchases ₹80 lakh from A and ₹40 lakh from B, only A is above the threshold and Section 194Q applies on the excess ₹30 lakh. There is no aggregation across different PANs.

The same principle applies in reverse: if the same PAN-owned entities source from the same buyer, the threshold is computed per seller PAN, not per invoice.

Example 4: Section 194Q vs Section 194-O

A handicraft seller in Kutch lists on an e-commerce marketplace (say, a major India platform). The marketplace is the e-commerce operator and falls under Section 194-O. Section 194Q does not apply to the underlying buyer-seller transaction — the marketplace deducts at 1% under Section 194-O and deposits the TDS.

If the same handicraft seller also sells directly to a retail chain in Ahmedabad with an offline invoice, the retail chain is the deductor under Section 194Q once its turnover and the ₹50 lakh threshold are met.

Example 5: PAN not furnished

A Rajkot-based parts buyer purchases ₹60 lakh of castings from a small foundry in Rajkot. The foundry does not furnish a PAN. The buyer must:

• Apply Section 206AA and deduct at 5% of the amount exceeding ₹50 lakh (the rate specified in Section 194Q, 0.1%, or 5%, whichever is higher → 5%)
• TDS = 5% × ₹10,00,000 = ₹50,000
• The credit is not available to the seller in 26AS until the foundry obtains a PAN; the buyer should insist on PAN before making the first payment, to avoid the higher deduction and the operational complication

Example 6: Imports — Section 194Q does not apply

A chemical trader in Ankleshwar imports a solvent from a non-resident seller through a Letter of Credit. Section 194Q does not apply to this purchase because the goods are imported under the Customs Act, 1962. TDS is governed by Section 196 read with Rule 37BA, which is a separate compliance chain routed through Customs and authorised dealers.

Step-by-Step — How to Deduct, Deposit, File and Reconcile

Step 1 — Confirm the buyer-turnover condition

At the start of each financial year, every business whose turnover may have crossed ₹10 crore in the just-concluded FY should:

• Pull the audited or provisional turnover from the FY’s financial statements or GST returns (GSTR-9 is a strong proxy for businesses with GST registration)
• Compare against ₹10 crore
• If crossed, mark the entity as a Section 194Q deductor from 1 April of the next FY
• If under ₹10 crore, no Section 194Q TDS obligation for the FY, even on large individual purchases

Step 2 — Collect seller PAN and capture the threshold

• Obtain a copy of every seller’s PAN card and the GST registration certificate (where applicable)
• Maintain a per-seller-PAN register tracking cumulative purchase value, date of crossing ₹50 lakh, and TDS deducted thereafter
• Update the register at every invoice booking — this is the single most useful document if the department audits the Section 194Q position

Step 3 — Deduct TDS at credit or payment, whichever is earlier

TDS arises at the earlier of:

• Credit of the purchase amount to the seller’s account in the buyer’s books (including provisionally booked purchases)
• Actual payment, whether by bank transfer, cheque, journal adjustment, or set-off against any other amount receivable from the seller

If the buyer books a purchase on 28 February 2027 but pays on 5 March 2027, TDS is deducted on 28 February 2027 — the deposit is then due by 7 March 2027.

Step 4 — Deposit under Challan 281 by the 7th of next month

• Use Challan 281 on the TIN-NSDL portal or the income tax e-filing portal
• Section code: 194Q (“TDS on purchase of goods”)
• Major head: 0021 (Income Tax on Companies) for companies; 0020 (Income Tax on Non-Companies) for firms, LLPs, individuals, HUFs, AOPs, BOIs and trusts
• Due date: 7th of the month following the month of deduction, per Rule 30 of the Income Tax Rules, 1962. A deduction on 30 September 2026 is due by 7 October 2026
• Capture the BSR code, challan serial number and amount — these feed into Form 26Q

Step 5 — File Form 26Q quarterly

TDS under Section 194Q is reported in Form 26Q (non-salary, non-NRI TDS). Quarterly due dates:

Quarter	Period	Due date
Q1	April – June	31 July
Q2	July – September	31 October
Q3	October – December	31 January
Q4	January – March	31 May

The return requires the seller’s PAN, name, section code 194Q, gross amount paid/credited, and the amount on which TDS was deducted (i.e., the excess above ₹50 lakh), TDS deducted, and challan identification. File on the TRACES portal accessed via the income tax e-filing portal.

Step 6 — Issue Form 16A within 15 days of Form 26Q due date

After Form 26Q is processed, download Form 16A (TDS certificate for non-salary payments) from TRACES. Issue it to the seller within 15 days from the due date of the TDS return (Section 203 read with Rule 31). The seller uses Form 16A and the corresponding entry in Form 26AS / AIS to claim credit while filing the ITR.

Step 7 — Reconcile Form 26AS / AIS at year-end

Verify in Form 26AS / AIS that the Section 194Q TDS deducted and deposited appears correctly under the seller’s PAN, with the correct section code and the right amount. Mismatches (wrong PAN, wrong amount, wrong section code) mean the seller’s ITR will not auto-credit the TDS, leading to a refund delay or a Section 143(1) intimation. See our guide on checking TDS credit in 26AS and AIS for the reconciliation mechanics.

Common Mistakes

The mistakes below are the ones that generate Section 201 deemed assessee notices, Section 271H late-filing penalties and Section 40(a)(ia) disallowances year after year. Treat the numbered list as the audit checklist for FY 2026-27.

1. Applying 0.1% on the entire invoice value instead of the excess above ₹50 lakh. A buyer deducting TDS on ₹80,00,000 when the threshold has just been crossed at ₹50 lakh has deducted on a base that is ₹30,000,000 too high. The credit available to the seller is correct only if the base matches the section’s wording — the excess.
2. Triggering Section 194Q in the same year the turnover crosses ₹10 crore. The section uses the preceding financial year’s turnover. The obligation crystallises only from the next financial year. A business that crosses ₹10 crore in FY 2025-26 is a deductor from 1 April 2026, not from 1 July 2025.
3. Aggregating purchases across sellers with different PANs. The ₹50 lakh threshold is per seller PAN. A buyer purchasing ₹30 lakh from each of three different sellers (same group, different PANs) has no Section 194Q obligation on any of them — though the department may look at substance over form if the arrangement appears designed to avoid the threshold.
4. Including GST in the TDS base. When GST is shown separately on the invoice, the TDS base is the pre-GST value. Including GST inflates the deduction and the seller cannot claim credit on the GST component.
5. Missing the 7th-of-next-month deposit deadline. A deduction on 28 March 2027 must reach the government by 7 April 2027. The interest under Section 201(1A) is 1.5% per month from the due date to the actual deposit date.
6. Not issuing Form 16A to the seller within 15 days. Without Form 16A, the seller’s ITR processing fails and the buyer faces procedural penalties. The seller is also unable to claim credit until Form 16A is issued.
7. Treating 194Q and 194-O as cumulative. Section 194-Q does not apply when Section 194-O applies. An e-commerce platform is the deductor; the buyer-seller pair do not run a parallel 194Q compliance chain. Trying to do so creates a double-deduction and a reconciliation mess in 26AS.
8. Treating Section 194Q as an annual transaction check. The threshold is breached cumulatively through the year. A first invoice of ₹30 lakh in April and a second of ₹25 lakh in May may not cross the threshold. A subsequent invoice of ₹10 lakh in June crosses it, and TDS applies on the ₹15 lakh excess in June — not on the May purchase.
9. Failing to deduct because the seller is unregistered under GST. GST registration is irrelevant for Section 194Q. A composition taxpayer, an unregistered dealer, an exporter, or an SEZ unit — if resident and selling goods — all attract Section 194Q TDS once the buyer-side conditions are met.
10. Not budgeting for Section 194Q in cash flow. TDS reduces the cash paid to the seller (the seller receives gross less TDS, then claims TDS as credit in their ITR). The cash-flow impact for a buyer purchasing ₹80 lakh from a single seller is ₹3,000 in TDS — small per transaction, but adds up across multiple sellers and quarters.

FAQ

What is Section 194Q of the Income Tax Act?

Section 194Q requires a buyer whose total turnover in the preceding financial year exceeds ₹10 crore to deduct TDS at 0.1% on the amount (in excess of ₹50 lakh) credited or paid to a resident seller for the purchase of goods in a financial year. The section was introduced by the Finance Act, 2021 with effect from 1 July 2021 and replaced the seller-side TCS obligation under Section 206C(1H), which was prospectively withdrawn from 1 April 2021.

How is the ₹50 lakh purchase threshold computed?

The threshold is computed per seller PAN per financial year. The buyer aggregates all purchases of goods (excluding GST where shown separately, excluding imports, excluding e-commerce transactions under Section 194-O) from each unique seller PAN. When the cumulative figure crosses ₹50,00,000 in the FY, TDS applies on the amount exceeding ₹50 lakh for subsequent purchases from that PAN — and on any earlier purchases if they were not treated as exceeding the threshold.

Does Section 194Q apply on imported goods?

No. Section 194Q applies only to purchases from resident sellers and explicitly excludes goods imported under the Customs Act, 1962. Imports attract TDS under Section 196 read with Rule 37BA, which is a separate chain routed through the Customs and authorised dealer mechanism.

What is the rate of TDS on the purchase of goods?

The TDS rate under Section 194Q is 0.1% of the amount in excess of ₹50 lakh credited or paid in a financial year. If the seller does not furnish a PAN, Section 206AA raises the rate to 5% (the higher of 0.1% and 20% under Section 206AA, but the section-specific higher rate is 5% per Section 194Q’s own proviso — the operative rate is 5% in either reading). The higher rate applies until the seller furnishes a PAN.

How is the TDS base calculated when GST is on the invoice?

The TDS base is the value of purchase of goods excluding GST when GST is shown separately on the invoice. When the invoice is silent on GST or the seller quotes an inclusive figure, the buyer must back out the applicable GST (at the seller’s GST rate) and apply 0.1% on the computed pre-GST value. The buyer’s ITC eligibility on the GST portion is unaffected.

Does Section 194Q apply to e-commerce transactions?

Section 194Q does not apply when Section 194-O applies. If the purchase is routed through an e-commerce operator who is the deductor under Section 194-O, the buyer does not deduct under Section 194Q. This avoids double deduction. Direct transactions between a buyer and an e-commerce seller (where the e-commerce platform is only a discovery or payment-processing channel) may still attract Section 194Q.

What if the buyer’s turnover was under ₹10 crore last year but crossed it this year?

Section 194Q is triggered by the preceding financial year’s turnover. A buyer whose turnover in FY 2025-26 is, say, ₹8 crore, and who crosses ₹10 crore in FY 2026-27, is not a Section 194Q deductor for FY 2026-27. The obligation crystallises from FY 2027-28, using the FY 2026-27 turnover as the reference. The compliance clock for the FY of crossing is silent on Section 194Q.

What is the penalty for non-deduction of TDS under Section 194Q?

The buyer faces three layered consequences for failure to deduct or deposit:

• Section 201(1A) interest at 1.5% per month on the TDS amount not deducted (from the date deduction should have been made) or on TDS deducted but not deposited (from the date of deduction until deposit).
• Section 201(1) / 201(1A) deemed assessee treatment — the buyer is treated as the assessee in default and is liable to pay the TDS, interest, and any penalty that the department may levy under Section 271H for late or defective Form 26Q filing. Section 271H penalty ranges from ₹10,000 to ₹1,00,000 per default.
• No automatic Section 40(a)(ia) disallowance — unlike rent, commission, fees and most other payment categories, Section 194Q disallowance under Section 40(a)(ia) applies differently. In practice, the buyer’s claim of the purchase as an expense is allowed once the TDS default is cured (deposit with interest), but the department’s position can vary. A formal Section 201 response is the cleaner route.

Is GST to be included in the TDS base if no separate line is shown?

If the invoice is silent on GST or shows an inclusive figure, the buyer must back out the applicable GST at the seller’s GST rate and compute TDS on the pre-GST value. The safest practice is to require every seller to issue a GST-compliant invoice with GST shown separately — this also keeps the GST ITC claim clean.

Can a buyer apply for a lower deduction certificate under Section 197?

Yes. A buyer can apply to the assessing officer for a certificate under Section 197 authorising deduction at a lower rate (including nil) if the seller’s total income justifies it. The application is made in Form 13 and is typically used where the seller’s marginal tax rate is below the effective TDS rate. The certificate is issued for a specified period and is filed along with the TDS return.

Sources and References

• Section 194Q, Income Tax Act, 1961 — TDS on purchase of goods (introduced by Finance Act 2021, effective 1 July 2021)
• Section 206AA, Income Tax Act, 1961 — Higher TDS rate when PAN is not furnished
• Section 197, Income Tax Act, 1961 — Certificate for lower or nil deduction
• Section 201 / 201(1A), Income Tax Act, 1961 — Consequence of failure to deduct or deposit TDS
• Section 271H, Income Tax Act, 1961 — Penalty for failure to file TDS return
• Section 194-O, Income Tax Act, 1961 — TDS on e-commerce transactions (overrides Section 194Q)
• Section 196 read with Rule 37BA, Income Tax Rules, 1962 — TDS on imports
• Rule 30, Income Tax Rules, 1962 — Due date for deposit of TDS (7th of next month)
• Rule 31, Income Tax Rules, 1962 — TDS certificate (Form 16A) issuance
• Form 13 — Application for lower or nil TDS deduction certificate under Section 197
• Form 26Q — Quarterly TDS return for non-salary, non-NRI payments
• Form 16A — TDS certificate for non-salary payments
• Challan 281 — TDS deposit challan on the TIN / e-filing portal
• CBDT Circular No. 13/2021, dated 30 June 2021 — Clarifications on Section 194Q (effective date, threshold computation, GST interaction, e-commerce interplay)
• CBDT Notification withdrawing Section 206C(1H), dated 29 December 2020 — Withdrawal of the seller-side TCS provision that Section 194Q effectively replaced
• Income Tax e-filing portal: https://www.incometax.gov.in
• TRACES portal: https://www.tdscpc.gov.in
• Finance Act, 2021 (Text of Section 194Q): https://www.incometax.gov.in

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Disclaimer: This article is for general informational purposes and reflects the position of Section 194Q of the Income Tax Act, 1961 as understood at the time of publication (FY 2026-27). The threshold, rate, and procedural rules can change with subsequent Finance Acts, CBDT notifications and circulars. The treatment of specific transactions — inter-state purchases, GST-inclusive invoices, e-commerce overlays, and group-PAN structures — depends on the facts and the agreement. Consider professional advice before relying on this article for a significant transaction or to respond to a notice.

If your Gujarat business has just crossed ₹10 crore turnover, or if you have a multi-seller purchase register that needs Section 194Q mapping, or if you have received a Section 201 / 271H notice on a Section 194Q default, this is a good moment to get a review. FinTax24 handles end-to-end TDS return filing, including Form 26Q preparation, challan reconciliation and Form 16A issuance. For back-year defaults and notices, our TDS notice reply service covers Section 201 deemed assessee proceedings, Section 271H penalty mitigation and TDS correction statement filing. For purchase-register set-up that maps directly to Form 26Q output, our monthly bookkeeping team sets up the per-seller-PAN tracker that makes Section 194Q compliance auditable. Share the FY 2025-26 turnover and the seller list on WhatsApp for a no-charge assessment.