Already missed a deduction? Compute the 201(1A) interest and 234E fee — or check the other collection categories in the TCS rate & threshold calculator.
Two provisions were built on the same transaction. Section 194Q of the Income-tax Act, 1961 requires a buyer whose total sales, gross receipts or turnover from business exceeded ₹10 crore in the immediately preceding financial year to deduct 0.1% of the value of goods purchased from a resident seller, on the amount exceeding ₹50 lakh in the year, at the time of credit or payment, whichever is earlier. Section 206C(1H) required a seller whose turnover exceeded ₹10 crore in the immediately preceding financial year to collect 0.1% from a buyer on consideration received for sale of goods exceeding ₹50 lakh in the year, at the time of receipt. Both use a ₹10 crore turnover gate and a ₹50 lakh transaction gate, but one is a deduction on credit-or-payment and the other a collection on receipt.
Where both could apply, the statute resolves it in favour of the buyer. The second proviso to Section 206C(1H) provides that it does not apply where the buyer is liable to deduct tax under any other provision of the Act on the goods purchased and has deducted it — and CBDT Circular 13 of 2021 confirms that Section 194Q takes precedence. Section 194Q has its own stand-down in the opposite direction: the second proviso to Section 194Q(1) switches the section off where tax is deductible under any other provision of the Act, or collectible under any provision of Section 206C other than sub-section (1H). So a transaction already covered by, say, Section 206C(1) for scrap or Section 206C(1F) for a motor vehicle never reaches 194Q at all.
From 1 April 2025 the overlap has largely gone. A proviso inserted into Section 206C(1H) by the Finance Act 2025 makes it inapplicable to transactions on or after that date. The sub-section has not been omitted from the statute — which matters for earlier years still under assessment — but it has no operation going forward, leaving Section 194Q as the single question on an ordinary goods transaction. For a financial year up to 2024-25 the older analysis, including the priority rule, is still the one to apply.
A buyer with business turnover of ₹42 crore in the preceding financial year purchases goods worth ₹80 lakh from a resident seller during the year. The seller has furnished its PAN. Nothing else in the Act catches the transaction.
