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TDS on Purchase of Goods (Section 194Q)
A buyer whose business turnover exceeded ₹10 crore in the previous year deducts TDS at 0.1% on purchases from a single resident seller, but only on the amount above ₹50 lakh in the year. Since TCS on sale of goods under 206C(1H) was removed from 1 April 2025, 194Q is now the only provision for these transactions.
Quick answer (FY 2025-26 and FY 2026-27)
- TDS rate
- 0.1%
- Threshold
- Purchases above ₹50 lakh from one seller in the year
TDS on purchase of goods: rate chart
| Payment | Section (1961 Act) | New section (2025 Act) | Rate | Threshold |
|---|---|---|---|---|
| Purchase of goods from a resident seller, by a buyer with turnover over ₹10 crore last year | 194Q | 393(1), Sl. No. 8(ii) | 0.1% of the amount above ₹50 lakh | ₹50 lakh per seller per year |
| Same, where the seller has no PAN | 194Q | 393(1), Sl. No. 8(ii) | 5% | ₹50 lakh per seller per year |
Who has to deduct TDS on purchase of goods
Only a buyer whose total sales, gross receipts or turnover from business exceeded ₹10 crore in the previous financial year. A buyer below that turnover has no obligation under 194Q, whatever the purchase value.
TDS is on the amount paid or credited to one seller above ₹50 lakh in the year. If you buy ₹80 lakh from a supplier, TDS is 0.1% of ₹30 lakh, which is ₹3,000.
GST, advances and the end of TCS
Where TDS is deducted at the time of credit, it is generally on the purchase value excluding GST. If you deduct on an advance payment, it is on the full advance.
TCS on sale of goods under old Section 206C(1H) was omitted from 1 April 2025, so sellers no longer collect TCS on these sales. From 1 April 2026, 194Q is in the Section 393(1) table of the Income-tax Act, 2025.
TDS on purchase of goods calculator
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Applies only if your turnover exceeded ₹10 crore in the previous year.
Frequently Asked Questions
What is the TDS rate on purchase of goods?
Who needs to deduct TDS under 194Q?
Is 194Q TDS on the full purchase value?
Is TCS on sale of goods still collected?
Is TDS on purchase of goods deducted on GST?
What is the new section for 194Q?
What is the due date for depositing TDS on purchase of goods?
What happens if TDS on purchase of goods is not deducted or deposited on time?
Which TDS return and certificate apply to TDS on purchase of goods?
How can the payee check the TDS deducted?
Did the Income-tax Act 2025 change TDS rates from April 2026?
New section references are to the Income-tax Act, 2025, in force from 1 April 2026. Verify the table serial number against the official text before quoting it in a return or notice reply.