TDS on purchase of goods new section 393 under Income Tax

TDS on purchase of goods new section 393 under Income Tax Act 2025

Under the Income-tax Act, 2025, Tax Deducted at Source (TDS) on the purchase of goods (formerly covered under Section 194Q) is governed by Section 393(1) [Table: Sl. No. 8(ii)].

Here are the detailed provisions regarding TDS on the purchase of goods:

1. Who must deduct TDS? (Definition of a “Buyer”)

The obligation to deduct tax falls on a “buyer”. The Act defines a buyer as a person whose total sales, gross receipts, or turnover from their business exceeded ₹ 10 Crores during the tax year immediately preceding the year in which the purchase is made. (Note: The Central Government may notify specific persons to be excluded from this definition).

2. Threshold Limit

You are not required to deduct TDS on all purchases. The tax must be deducted only on the purchase amount that exceeds ₹ 50 Lakhs from a single seller in a given tax year.

3. Rate of TDS

Standard Rate: The tax must be deducted at a rate of 0.1% on the sum exceeding ₹ 50 Lakhs.
If the Seller does not provide a PAN: If the seller fails to furnish a valid Permanent Account Number (PAN), the buyer is legally required to deduct tax at a higher rate of 5%. (This is a specific exception to the general 20% penalty rate for missing PANs under other sections).

4. When should it be deducted?

The tax must be deducted at the time the sum is credited to the account of the payee (seller) or at the time of payment in cash, cheque, draft, or any other mode, whichever is earlier.

5. Exceptions (When TDS is not required)

The TDS requirement under this section does not apply if tax on the transaction is already deductible or collectible under any other provision of the Income-tax Act.

6. TDS Return / Challan Code
When depositing the tax and filing the quarterly TDS statements (like Form No. 140) or the specific section code you must use for the purchase of goods is 1031.

Section 393 Income Tax Act 2025 Tax to be deducted at source.

Form 140 Income Tax Rules 2026 Quarterly statement of deduction of tax under section 397(3)(b) in respect of payments made other than salary for the quarter ended…………………………(June/September/December/March) ………………. (Tax Year)]

Section Codes for TDS Return Income Tax Form 140 Income Tax Rules 2026

Your Query solved

Section 393(1) [Table: Sl. No. 8(ii)],

Section 393(1) [Table: Sl. No. 8(ii)] replaced section 194Q income tax act 1961,

TDs on Purchase of Goods ,194q new section

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TDS on purchase of goods new section 393 under Income Tax Act 2025

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