TDS Software | 194Q vs 206C(1H) Decisioning

194Q vs 206C(1H), resolved at the bill, not at FY-end.

Section 194Q (buyer deducts at 0.1% on goods purchases above ₹50L per FY per seller) and Section 206C(1H) (seller collects on the same kind of transaction) overlap. The system tracks both buyer and seller turnover histories and applies whichever side the law assigns.

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What the system does

Capability, input, output.

Capability	Input	Output
Turnover history	Buyer and seller annual turnover	Per-relationship liability flag
₹50L threshold tracker	Per-relationship FY purchases	Breach flag at the line
194Q deduction	Buyer liability + bill above threshold	0.1% TDS at the line
206C(1H) collection	Seller liability + bill above threshold	0.1% TCS at the line
Suppression logic	Both sides liable	194Q applies; 206C(1H) suppressed

Turnover history

Input

Buyer and seller annual turnover

Output

Per-relationship liability flag
₹50L threshold tracker

Input

Per-relationship FY purchases

Output

Breach flag at the line
194Q deduction

Input

Buyer liability + bill above threshold

Output

0.1% TDS at the line
206C(1H) collection

Input

Seller liability + bill above threshold

Output

0.1% TCS at the line
Suppression logic

Input

Both sides liable

Output

194Q applies; 206C(1H) suppressed

Compliance + integrations

Section 194Q and 206C(1H), resolved by the law.

Section 194Q has primacy. Where the buyer is liable under 194Q, the seller does not collect under 206C(1H). The system applies this rule automatically.

Regulations we work within

Section 194Q

Buyer with FY-1 turnover > ₹10 crore deducts 0.1% on goods purchases > ₹50L per seller.
Section 206C(1H)

Seller with FY-1 turnover > ₹10 crore collects 0.1% on the same transaction (suppressed where 194Q applies).
CBDT Circular 13/2021

Resolution of 194Q vs 206C(1H) overlap as clarified by the CBDT.

Connects to

CBDT Turnover threshold reference
Tally Prime 194Q/206C(1H) sync

194Q vs 206C(1H) Decisioning FAQ

What buyers ask.

We're a buyer above ₹10 crore turnover. The seller is also above ₹10 crore. Who deducts?

194Q applies to the buyer per CBDT Circular 13/2021. The buyer deducts 0.1% TDS on purchases > ₹50L per seller per FY. The seller does not collect 206C(1H) on those transactions.

How do we get the seller's turnover for the relationship check?

Sellers self-declare their preceding FY turnover at the vendor master. The system uses this declaration; if not declared, the conservative assumption is that the seller is below the threshold (so 194Q does not apply unless buyer threshold is met).

What about goods imported from a foreign supplier?

Section 194Q does not apply to imports (foreign supplier outside India). Section 195 (foreign-vendor TDS) applies instead with the relevant DTAA rate.

Related features

See the 194Q decision for your top buyers and sellers.

Connect one entity, free. The system tracks turnover for every buyer-seller relationship. The 194Q vs 206C(1H) resolution surfaces per relationship.