TDS under section 194Q on Purchase of Goods & its applicability to APMC Broker

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TDS under section 194Q on Purchase of Goods & its applicability to APMC Broker

 

Query 1]

Your article on sec 194Q sec 204 C (1H) was very informative. Please help us in resolving the following problem.

I am Packa Adatia (i.e., Broker) registered with APMC and sell soybean on behalf of agriculturists to oil mills & get Brokerage (Dalali) from them. Now, the oil mill is deducting TDS on brokerage on my commission, being my income, it is correct.

But as per new law w.e.f.1st july2021, they have started deducting tax on sales made by us on behalf of agriculturists as the sale bill clearly gives the name of agriculturist whose goods are sold. It may be noted that none of the individual (single) agriculturists is selling above Rs. 50 Lakh but turnover of ours (cumulative of all seller agriculturists) is exceeding Rs. 50 Lakh. I am not the actual seller as goods don’t belong to me and so buyers are not supposed to do TDS on payment to me. How can I ask oil millers to not deduct tax @ 0.10%? My turnover is below Rs. 10 core (as commission is quite low, even the turnover as adatia cannot be considered for audit & we show only commission or dalali as our income). The purchaser (oil mill) turnover is above Rs. 10 crore.  Is there any specific circular or FAQ by the department clarifying this issue? Please guide me.  [*c******@gmail.com]

Opinion:

  1. New law comes with a new set of controversy, complications & ambiguities & takes time to settle. This is true even with respect to the recently introduced TDS provision which requires every buyer of goods to do TDS @ 0.10% if the amount of purchases from any one seller exceeds Rs. 50 Lakh.
  2. It is a known and admitted fact that you are not the actual seller of the goods but acting as an agent on behalf of the agriculturist only.
    It may be noted that buyer (Oil Millers) is dealing with you directly and not with the agriculturist or anyone else. With this perspective, you are the seller of goods to the buyer. Not doing TDS on these transactions by the buyers would be disastrous for them as it would result in abrupt disallowance of 30% under section 40(a)(ia). At the grass root level of the Income Tax Department, not deduction of tax at source (TDS) by the buyers (oil mill) would make them non – compliant and assessee-in-default which will be subject to all the penal consequences. In short, at present, the buyers would be right in doing TDS on these transactions even though it may not look logical or proper from your side.
  3. Unless and until CBDT clearly provides relaxations & immunity to APMC Brokers / Adatia, all will continue to face the similar issue of TDS U/s 194Q from the buyer of the goods.
  4. To some extent, the issue is controversial and an alternate view is also possible. An immediate relaxation by the CBDT is required for all the APMC brokers/ Adatia as they will be showing brokerage as income in the Income Tax Return (ITR) whereas the gross amount would be reflected in Form No. 26AS. The figures as per 26AS would not match with figures of turnover as may be incorporated in the ITR which would result in issuance of notices by the income tax department.
  5. It may be appreciated that the CBDT has already provided relaxation to APMC brokers/ Adatia with regard to TDS on cash withdrawals from bank U/s 194N and similar relaxations also need to be provided in respect of TDS U/s on purchase of goods under section 194Q.

Query 2]

Sir I am a salaried person filling ITR regularly. My son is studying in foreign country to whom I sent money via foreign currency. Statement of Financial Transactions (SFT) transaction is getting reflected in my Form no. 26 AS. I request you to kindly guide me if it is required to be mentioned in ITR of A.Y. 2021-22? [bbhoskar@gmail.com]

Opinion:

The SFT transactions are reflected in the Form No. 26AS for information purposes. This is reflected so as to just convey that the income tax department is having a 360-degree profile of the taxpayers. While filing ITR, you are not required to do anything but just to note that the payment / transactions are well explainable if the information is called for by the department.

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