Are you a business with a turnover exceeding ₹10 crore? If so, there are crucial updates related to TDS and TCS compliance that you need to be aware of for high-value transactions. These updates can directly impact how you handle purchases and sales in your accounting and invoicing systems.

TDS Applicability for Buyers – Section 194Q

If you are the buyer, the provisions of Section 194Q of the Income Tax Act apply to you:

• TDS @ 0.1% must be deducted on purchases of goods exceeding ₹50 lakh from a single seller in a financial year.
• This applies only if your turnover exceeded ₹10 crore in the previous financial year.
• The deduction must be made at the time of credit or payment, whichever is earlier.

Tip: Ensure your ERP or accounting software flags such transactions to comply with TDS deduction timelines.

No TCS Required for Sellers – Section 206C(1H)

If you are the seller, here’s the major update:

• No TCS is required to be collected on the sale of goods exceeding ₹50 lakh from FY 2023–24 onwards under Section 206C(1H).
• Buyer-wise tracking of sales for TCS compliance is no longer required.
• The previous rule, which mandated sellers with turnover above ₹10 crore in the preceding year to collect TCS, is no longer applicable.

This update significantly reduces the compliance burden for sellers who were previously required to maintain detailed buyer-wise sales reports and collect TCS accordingly.

What Should You Do?

Update your invoicing and accounting systems immediately to reflect these changes:

• Remove TCS auto-calculations under Section 206C(1H) in your billing software.
• Focus on ensuring TDS compliance if you’re a buyer under Section 194Q.
• Educate your finance and accounts teams about these updates to avoid incorrect tax deductions or collections.

Summary of Action Points

Stay Compliant. Stay Informed.
For expert guidance on TDS/TCS compliance, tax audits, or system updates, get in touch with Semantic Taxgen – your trusted partner in tax and accounting solutions.