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# What is TDS on purchase of goods according to Section 194Q? How can I manage it in Zoho Books?

The Section 194Q is a tax section pertaining to Tax Deducted at Source (TDS) that has been mandated as a result of the Finance Act, 2021 and is effective from July 1 2021.

As per Section 194Q, when a buyer, whose yearly turnover is greater than 10 crore rupees purchases goods from a domestic vendor for a value that exceeds 50 lakh rupees, the buyer will have to deduct 0.1% of the value during the time of credit or payment as TDS.

**Note:** This tax deducted at source is applicable only for purchases from domestic sellers and is not applicable for imports.

#### How is the TDS as per Section 194Q calculated?

Zoho Books allows you to select the Section 194Q as the TDS rate while creating a new bill. Once you’ve selected the Section 194Q as the TDS section, the tax is automatically calculated on the sub-total.

The 194Q is always deducted from the amount that is greater than 50 lakhs. Here’s how you can manually calculate the TDS 194Q for your purchases:

> _0.1% of \[Total value of the purchase of goods - 50 lakhs\]_

For example, let’s assume you’ve purchased capital goods worth 55 lakhs from a resident vendor. The TDS applicable will be 0.1% of the difference between 55 lakh and 50 lakh rupees (which is equal to 500 rupees).

**Note:** The TDS rate is 5% and not 0.1% if the vendor has not furnished their PAN card details.

#### When is the TDS as per 194Q calculated?

The TDS is deducted while making the payment. Here’s how you can configure the Section194Q while creating a bill in Zoho Books:

*   Click **Purchases** in the left sidebar and select **Bills** from the dropdown.
*   Click the **\+ New** button in the top right corner of the page.
*   Fill in the required details.
*   Select the **TDS** button and click the dropdown next to it.
*   Click **Manage TDS**.

![Configuring Section 194Q](/in/books/kb/images/taxes/tds-manage.png)

*   Next, click **+New TDS Tax** in the pop-up that appears.
*   Select **194Q - Purchase of goods** as the TDS tax type.
*   Enter the tax rate as 0.1%.

![Configuring Section 194Q](/in/books/kb/images/taxes/tds-name.png)

**Warning:** You’ll have to enter the tax rate as 5% if the vendor has not furnished their PAN details.

Click **Save**.

You’ll now be able to select the TDS 194Q as the tax while creating a new bill.

#### When is TDS as per 194Q not applicable?

The TDS as per Section 194Q will not be applicable if:

*   goods have been imported
*   your turnover does not exceed 10 crores
*   TDS is deductible as per any other section
*   TDS is collectible as per the the section 206C except for 206C (1H)

**Insight:** If your purchase falls below the criteria of both TDS 194Q and 206C (1H), you’ll have to consider the provisions in Section 194Q over 206C (1H).

**Insight:** Your purchase transaction will be applicable to TCS 206C (1H), if you have failed to deduct TDS section194Q.

#### As an E-commerce operator, should I apply TDS according to Section 194Q after applying TDS according to Section 194O to a transaction?

No, you need not apply TDS according to Section 194Q if the TDS according to Section 194O if the TDS has already been applied to a transaction according to Section 194O.

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