Section 194Q & 206C(1H) declaration Formats

For Buyer

To,

(Supplier’s/Seller Name & Address)

Sub: Regarding the change in compliance due to the insertion of new sections under the Income Tax Act. Dear Sir / Madam,

We,_________________ having PAN                           hereby inform you that our total sales/gross receipts/turnover from Business during FY 2020-21 has been more than Rs.10 Crore. Therefore, provisions of Section 194Q inserted in the Income Tax Act vide Finance Act 2021 with effect from 01.07.2021 are applicable to our company. Hence, we shall be deducting tax at source at per provisions of the above section from purchase consideration paid/credited on or after 01.07.2021 to you against supplies made by you at the rate of 0.1 percent of purchase consideration paid/credited exceeding rupees 50 lacs during the current financial year.

Since we are liable to deduct tax at source under section 194Q of the Act, you may ensure not to take any action to collect tax at source under section 206C(1H) of the Act w.e.f. 01.07.2021, in case provisions of section, are applicable to you considering your amount of turnover and our purchases being of more than rupees 50 lacs.

You are also requested to intimate your Permanent Account Number. In case you fail to provide your PAN, the tax will be deducted at the rate of 5 percent instead of 0.1 percent in terms of Section 206AA of the Act.

Further, you are also required to confirm that in your case amount of TDS/TCS was Rs.50,000/- or more in previous years relevant to Assessment Years 2019-20 and 2020-20 and you have filed your returns of income for these assessment years according to section 139(1), otherwise, tax is required to be deducted at the rate of 5 percent in terms of Section 206AB of the Act.

You may send to us your declaration in the enclosed draft on or before 20.06.2021 to enable us to take note of the same and modify our accounting software accordingly. In case your declaration is not received by us by the above date, we will modify our software to deduct tax at the rate of 5 percent and it would be difficult for us to take corrective action to reduce the rate during the current financial year.

Thanks,

For ______________________________

(Signature)

 For Seller

To,

Buyer’s Name & Address

Sub: Declaration/information for deduction of tax at source u/s 194Q of the Act.

Dear Sir,

This is with reference to your letter dated                       requiring our declaration/information in regard to deduction of tax at source u/s 194Q of the Act. The information is being provided hereunder:

Since your company is liable to deduct tax u/s 194Q of the Act, you may deduct the tax @ 0.1 % of sale consideration paid/credited by your company to us on the amount exceeding Rs.50 lacs during the current financial year. We also confirm that we will not take any action to collect tax at source under section 206C(1H) of the Act w.e.f. 01.07.2021.

Permanent Account Number of our company is____________. Further, we have duly filed our returns of income for Assessment Years 2019-20 and 2020-21 as per the information given hereunder:

Please take note of the above information and confirmation and deduct tax at the appropriate rate taking cognizance of the above information.

Thanks & Regards,

For_________________________

(Signature)