TDS on Purchase of goods (large buyers) — Section 194Q (now 393)
Rate
| Type of payment | Rate (with PAN) | Notes |
|---|---|---|
| any | 0.1% | — |
No valid PAN: 5% or the normal rate, whichever is higher (Section 397(2), old 206AA).
Threshold
TDS applies when: ₹50,00,000 aggregate in the year. TDS is on the amount exceeding the threshold.
Worked example
Paying ₹60,00,000 (plus GST) to goods purchased from one seller on 10 June 2026:
Exemptions & relief
- GST excluded from base if separately indicated (CBDT Circular 13/2021)
- Not applicable where 194O applies
- 206C(1H) seller-side TCS removed from 1 Apr 2025 — only buyer-side 194Q now
If you get it wrong
Late deduction: 1% per month or part thereof, from date deductible to date deducted.
Late deposit: 1.5% per month or part thereof, from date deducted to date deposited.
Late return: Rs 200/day (234E equivalent), capped at TDS amount in the statement.
Non-deduction: 30% of expenditure disallowed for non-deduction/non-deposit (40(a)(ia) equivalent); wrong payment code can trigger the same — verify scope under 2025 Act.
Good to know
- TDS on amount EXCEEDING Rs 50L
- Non-deduction → 30% expenditure disallowance
FAQs
What is the new section number for 194Q from FY 2026-27?
Under the Income Tax Act 2025, 194Q now falls under Section 393. The payment/return code is 1031.
What is the TDS rate under section 194Q?
0.1%. If the payee has no valid PAN, 5% applies (or the normal rate, whichever is higher).
What is the threshold for 194Q?
₹50,00,000 aggregate in the year.
Which TDS return is 194Q reported in?
Form 140 (was 26Q), filed quarterly.
Written and reviewed by a CA firm. Verified 2026-06-08 against the Income Tax Act 2025 / Finance Act 2025. General information, not advice for your specific case.