Comparision Between 194Q and 206C(1H) of Income Tax Act, 1961

Provisions related to TCS under section 206C(1H) was inserted by Finance Act 2020 which is applicable w.e.f. October 01, 2020 to collect tax on receipt of consideration on sale of goods. Whereas provisions related to TDS under section 194Q has been inserted by Finance Act, 2021 which is applicable w.e.f. July 01, 2021. Both the provisions are mirror of each other and deals in sale/purchase of a transaction. Where TDS provision under section 194Q will be applicable, TCS provisions under section 206(1H) shall not apply.

 

Provisions of both section 194Q and Section 206C(1H) are summarized in below table:

PARTICULARS	SECTION 194Q	SECTION 206C(1H)
Provisions are applicable from	1st July, 2021	1st October, 2020
Nature	Tax to be deducted on payment being made (TDS)	Tax to be collected on receipt of consideration (TCS)
Who will deduct or collect tax	Buyer/Purchaser will deduct TDS from seller	Seller will collect TCS from Buyer
When this provision will be applicable?	Turnover/ Gross Receipt/ Sales from the business of BUYER should exceed Rs 10 crore during the year (FY 20-21)	Turnover/ Gross Receipt/ Sales from the business of SELLER should exceed Rs 10 crore during the year (FY 19-20)
Timing of tax deduction	Payment or credit whichever is earlier	At the time of receipt of consideration
When this provision is not applicable?	1)    Transactions on which TDS is applicable under other provisions of the act   2)    Transactions on which TCS is applicable under 206C other than 206C(1H)	where TDS has been deducted u/s 194Q this section will not apply
When to deposit/collect	Tax so deducted shall be deposited with government by 7th day of subsequent month	Tax so deducted shall be deposited with government by 7th day of subsequent month
Rate of TDS/TCS	0.1 %     (if PAN is available) 5.0 %     (If PAN not available)   on amount exceeding Rs 50 Lakhs	0.1 % (if PAN is available) 1.0 % (If PAN not available)   On amount exceeding Rs 50 Lakhs
What are excluded from applicability of this provision	If notified by Government,   Not Yet Notified	If buyer is – Importer of goods Center/State Govt., Local Authority An embassy, High Commission, consulate and trade representation of a foreign state
Whether TAN is required to obtain	YES	YES