Business with lower than 10-crore turnover needn’t levy TDS on buys by way of exchanges

Businesses shopping for shares or commodities traded by way of recognised inventory or commodity exchanges for any worth even above Rs 50 lakh is not going to be required to deduct TDS on the transaction, the revenue tax division has stated.
With impact from July 1, 2021, the revenue tax division has launched a provision referring to Tax Deducted at Source (TDS), which might be relevant to companies with turnover of over Rs 10 crore.
Such companies whereas making any funds for buy of products exceeding Rs 50 lakh in a monetary 12 months to a resident can be required to deduct a 0.1 per cent TDS.
The tax division stated it had obtained representations saying that there are sensible difficulties in implementing the provisions of Tax Deduction at Source (TDS) contained in Section 194Q of the I-T Act in case of transaction by way of sure exchanges and clearing companies as someday in these transactions there isn’t any one to 1 contract between the consumers and the sellers.
“In order to remove such difficulties, it is provided that the provisions of section 194Q of the Act shall not be applicable in relation to transactions in securities and commodities which are traded through recognised stock exchanges or cleared and settled by the recognised clearing corporation,” the CBDT stated in its pointers dated June 30.
Section 194Q referring to TDS deduction by companies was launched within the 2021-22 Budget and has come into impact starting July 1, 2021. The CBDT has additionally clarified that solely these entities having turnover from the enterprise of greater than Rs 10 crore within the previous monetary 12 months can be required to deduct TDS on the time of buy of products over Rs 50 lakh.
“Buyer is defined to be person whose total sales or gross receipts or turnover from the business carried on by him exceed Rs 10 crore during the financial year immediately preceding the financial year in which the purchase of good is carried out,” it stated.