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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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194Q Vs 206C1H Decisioning

How it works

Two sections, one resolved decision.

Step 01

Turnover history per relationship

Buyer turnover (preceding FY > ₹10 crore) and seller turnover (preceding FY > ₹10 crore) tracked per relationship.

Step 02

Threshold check at the bill

When the buyer-seller relationship crosses ₹50L in goods purchases for the FY, the system computes which side is liable.

Step 03

Auto-resolution

If the buyer is liable to deduct under 194Q, 206C(1H) is automatically suppressed for that buyer. If only the seller is liable, 206C(1H) applies.

Step 04

Audit trail

The decision (which side acts), the supporting turnover figures and the threshold breach point all captured for audit.

What the system does

Capability, input, output.

  • 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.

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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.

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