The 60-second version
Section 194Q applies when buyer turnover exceeds ₹10 crore and purchases from resident seller exceed ₹50 lakh — 0.1% TDS on advance or payment. I register TAN, file 26Q, and reconcile with seller credit.
194Q hits buyers not sellers — turnover test is on purchaser
Section 194Q TDS applies when my business turnover exceeded ₹10 crore in the preceding FY and I buy goods worth more than ₹50 lakh from one resident seller in the current FY.
TDS is 0.1% on payment or credit whichever is earlier — seller must furnish PAN or rate jumps to 5% under Section 206AA.
I deposit via challan 281, file Form 26Q quarterly, and give Form 16A to seller for their 26AS credit.
Rent lane: Form 26Q rent guide.
Buyer TDS sections compared
| Section | Rate | Trigger |
|---|---|---|
| 194Q goods | 0.1% | Buyer TO > ₹10Cr + purchase > ₹50L |
| 194C contractor | 1% / 2% | Contract payment thresholds |
| 194J professional | 10% | Professional fees |
| 194I rent | 10% | Rent above threshold |
| 194H commission | 5% | Commission above ₹15k |
194Q compliance sequence
Check turnover
Preceding FY books > ₹10 crore.
Obtain TAN
If not already on payroll TAN.
Deduct on payment
0.1% on each tranche above cumulative ₹50L.
Challan 281
Deposit by 7th of next month.
26Q + 16A
Quarterly return and seller certificate.
TDS flow
194Q buyer kit
- TAN.
- Seller PAN.
- Purchase register.
- Challan receipts.
- 26Q acknowledgements.
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GST interaction
TDS under 194Q is on value excluding GST if shown separately on invoice.
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Turn this guide into a decision file
0 of 4 checked
Import purchases?
194Q resident seller only — imports excluded.
Buying from NRI?
Section 195 applies — not 194Q.
First year under ₹10Cr?
194Q not applicable until threshold crossed.
Advance payment?
TDS on advance if it counts toward ₹50L cumulative.
Penalty for miss?
Interest + disallowance of expense until deposited.
Composition dealer buyer?
Turnover test still on books — verify with CA.
Your tax year is already running.
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