2.3-15 Remuneration in addition to salary on the basis of work done

61

Deduction of tax at source on payment for purchase of goods

Who is responsible for tax deduction at source under section 194Q

61.1 Under section 194Q, tax is deductible by buyer of goods. “Buyer” for this purpose, means a person whose total sales, gross receipts or turnover from the business carried on by him exceed Rs. 10 crore during the financial year immediately preceding the financial year in which the purchase of goods is carried out. However, “buyer” does not include a person notified by the Central Government (subject to such conditions as may be specified therein)†. Any person (being a buyer) who is responsible for paying any sum to any resident seller for purchase of any goods of the value (or aggregate of such value) exceeding Rs. 50 lakh in any previous year, is required to deduct tax at source under section 194Q with effect from July 1, 2021.

When tax has to be deducted at source

61.2 Tax should be deducted by the buyer, at the time of credit of such sum to the account of the seller or at the time of payment thereof by any mode, whichever is earlier. Where, however, the above sum is credited to any account (whether called “suspense account” or by any other name) in the books of account of the person liable to pay such income, such credit of income shall be deemed to be the credit of such income to the account of the payee and the provisions of this section shall apply accordingly.

Tax deduction account number

61.3 See para 1.4.

Deposit of tax to the credit of Central Government

61.4 Tax is to be deposited to the credit of the Central Government as follows –61.4-1 Where to deposit - See para 1.5-1. 61.4-2 Time within which tax has to be deposited - See para 37.4-2.

† In exercise of this power, the Central Government has specified that Air India Assets Holding Ltd. shall not be considered as “buyer” for this purpose in case of transfer of goods by Air India Ltd. to it under a plan approved by the Central Government – Notification No. S.O. 3680(E), dated September 10, 2021.