TDS under section 194Q
Section 194Q requires a buyer with turnover above ₹10 crore to deduct 0.1% tax at source on the value of goods purchased from any single seller beyond ₹50 lakh in a financial year.
This sits in income tax, not GST, and it is the buyer's obligation. The threshold is tested per seller per year: the first ₹50 lakh of purchases from a given supplier attracts nothing, and 0.1% applies to the excess.
The rate rises sharply if the seller has not furnished a PAN, which is the practical reason to collect PAN details before the relationship gets large rather than after.
Until 31 March 2025 this ran alongside a mirror-image obligation on sellers under section 206C(1H), and businesses had to work out which of them applied to a given transaction. That parallel regime has ended — see the separate entry — so for purchases from 1 April 2025 onwards only the buyer's 194Q obligation is in play.
Key facts
- Applies to buyers whose turnover exceeded ₹10 crore in the preceding financial year.
- Triggered on purchases from a single seller exceeding ₹50 lakh in a financial year.
- Rate: 0.1% on the value above ₹50 lakh.
- Rate rises to 5% where the seller has not furnished a PAN.
- Calculated on value excluding GST where the tax is shown separately.
Who this affects
Larger buyers of goods, and the suppliers whose receipts they reduce.
Reviewed September 2026. This is general information about how these rules work, not tax or legal advice, and thresholds and due dates do change. Check your own position with your chartered accountant before acting on it.