The provisions relating to TDS on purchase of goods were introduced to track high-value transactions and have now been incorporated under the Income-tax Act, 2025 as Section 393(1) [Table: Sl. No. 8(ii)].
This provision ensures that large purchase transactions are brought within the reporting framework, thereby improving transparency and strengthening the tax system.
Quick Reference – Section Mapping & Reporting
- New Section: Section 393(1)
- Table Reference: Sl. No. 8(ii)
- Nature: Purchase of goods
- Old Section: 194Q
- Return Form: 26Q
- Rate: 0.1% / 5%
- Threshold: ₹50 lakh
What is Section 393(1) [Table: Sl. No. 8(ii)]?
Section 393(1) [Table: Sl. No. 8(ii)] provides that a buyer is required to deduct TDS on purchase of goods from a resident seller when the aggregate value of such purchases exceeds ₹50 lakh in a financial year. The provision was introduced to create a reporting trail for high-value transactions.
Which transactions are not covered under this section?
Transactions where the purchase value does not exceed ₹50 lakh are not covered. Additionally, transactions carried out through recognised stock exchanges or those already covered under other TDS provisions are excluded.
Who is considered a buyer under this section?
A buyer is a person whose total sales, turnover, or gross receipts from business exceed ₹10 crore in the immediately preceding financial year. Only such buyers are required to deduct TDS under this provision.
On what amount is TDS deducted?
TDS is deducted only on the amount exceeding ₹50 lakh during the financial year. The threshold is to be computed separately for each seller, requiring proper tracking of transactions.
How are purchase returns treated?
Where TDS has already been deducted and goods are subsequently returned, the TDS amount may be adjusted against future purchases from the same seller. However, if the goods are replaced, the original transaction is treated as completed and no adjustment is required.
When is TDS required to be deducted?
TDS must be deducted at the time of credit to the seller’s account or at the time of payment, whichever is earlier, ensuring timely compliance.
What happens if PAN is not furnished?
In cases where the seller does not furnish PAN, TDS must be deducted at a higher rate of 5% instead of 0.1%, ensuring stricter compliance.
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