Section 194Q and Section 206C (1H) are important provisions under the Income Tax Act that aim to streamline tax collection and ensure compliance. Understanding the differences between these sections is crucial for businesses and taxpayers to navigate their tax obligations effectively. Let's delve into the key variances between Section 194Q and Section 206C (1H).

SCOPE AND APPLICABILITY:

Section 194Q: It applies to buyers who are making specified purchases from resident sellers, exceeding a prescribed threshold.

Section 206C (1H): It applies to sellers collecting tax at source from buyers on certain specified sales transactions, surpassing a specified threshold.

TRANSACTIONS COVERED:

Section 194Q: It covers purchases of goods.

Section 206C (1H): It covers sales of goods.

THRESHOLDS:

Section 194Q: The threshold for applicability is if the total purchase value from a seller exceeds INR 50 lakhs in a financial year.

Section 206C (1H): The threshold for applicability is if the total sales value to a buyer exceeds INR 50 lakhs in a financial year.

TAX DEDUCTION AND COLLECTION RATES:

Section 194Q: The buyer is required to deduct TDS at the rate of 0.1% of the purchase value exceeding the threshold.

Section 206C (1H): The seller is required to collect tax at the rate of 0.1% of the sales value exceeding the threshold.

RESPONSIBILITY OF DEDUCTOR/COLLECTOR:

Section 194Q: The buyer is responsible for deducting TDS and remitting it to the government within the prescribed timelines. Section 206C (1H): The seller is responsible for collecting tax at source and depositing it to the government within the specified timeframes.