TDS on Purchase of Goods under Section 194Q applicable from 01-JUL-2021 .
Introduction:-As per Budget 2021, Section 194Q has been introduced where in the tax shall
be deducted under Section 194Q by a buyer carrying on a business whose total sales, gross
receipts or turnover from the business exceeds Rs. 10 crores during the financial year
immediately preceding the financial year in which such goods are purchased. This provision
shall be applicable from 01-07-2021. Also this provision will be attracted if the Purchase is
more than Rs 50 Lakhs from a vendor. TDS rate is 0.1%.
Section 194Q applies to purchases of both revenue and capital
goods. The TDS deduction on purchases exceeding the value of 50
lakhs will be 0.1%. However, if the seller does not have a PAN, the
deduction will be made at a higher rate of 5%
1 Defining Lookup
1. Navigate to Oracle Financials for India.
2. Asia/Pacific Lookup form > Query for Lookup "JAI_TDS_SECTION"
3. Add a new row for Section 194Q and provide value in Tag Field as "W".
4. Save changes.
2 Define Tax Rate
1. Navigate to Oracle Financials for India.
2. Tax Configuration > Define Tax Rate.
3. Define a 0% & 0.1% Tax Rate.
3 Define Tax Category
1. Navigate to Oracle Financials for India.
2. Tax Configuration > Define Tax Category.
3. Define tax category for each rate 0% as well as 0.1%.
4 Define Third Party Registration
1. Navigate to Oracle Financials for India.
2. Party Registration > Third Party Registration
3. Define for all the vendors for whom purchase of goods exceeds Rs 50 Lakhs.
4. Setup need to be performed first without site and without operating unit
5. Setup for each site of respective operating unit.
5.Defining Withholding Threshold (Normal)
1. Navigate to Oracle Financials for India.
2. Withholding Tax Setup > Define Withholding Threshold Setup.
3. Define for each vendor type applicable as per business need.
4. Provide From amount as 0. Save changes.
6.Defining Withholding Threshold
(Exception)
Type should be "Cumulative"
1. Navigate to Oracle Financials for India.
2. Withholding Tax Setup > Define Withholding Threshold Setup
3. Define for each vendor type applicable as per business need
4. Provide below slab:
From Amount To Amount Tax Rate
0 50,00,000 0%
50,00,001 0.1%
5. Assign Tax Category defined in step 3 for each rate for all the Operating units.
6. Assign all vendors from whom purchase is on and above Rs 50 Lakhs.
Note:-Both normal and exception setup is required because as per 194Q
TDS is to be deducted on and above Rs 50 Lakhs. If only normal
Threshold is defined then if any invoice which breaches the threshold
of Rs 50 Lakh will generate additional TDS invoice calculating TDS on
previous invoices where TDS is not calculated. Exception setup will help
in calculating the TDS from Rs 50,00,001.
Enable Withholding Tax Applicable
7 for Transaction Taxes
1. Navigate to Oracle Financials for India.
2. Tax Configuration > Define Tax Type > Define New Tax Type
3. Provide Details and ensure Withhold tax Applicable flag is checked.
Note:-In case of 194Q TDS needs to be calculated on Transaction Tax lines also.
In Order to achieve this ensure that transaction tax has "Withholding Tax
application is checked.
Please note when you are enabling this flag TDS will be generated on GST
tax lines also. Hence here it is better to have separate tax type created for
GST taxes for 194Q purpose otherwise if same GST taxes used and applied
to transaction then TDS will be calculated under different section also.
Consider user has created invoice on which 194C is applicable.
User has applied GST taxes. Now if the same GST tax type are used for this
transaction, then TDS will be calculated on GST lines even though the same
is not required under section 194C.
This setup can be ignored as no TDS on GST need to be calculated as per
Circular#13 Dated 30-JUN-2021.
Prepared By: Prasanna Mohanty
Dtd:-1-Dec-2022
