Rules checked on 17-10-2026
How to use the calculator
- Enter your own turnover for last financial year, in crore. The test is on the buyer, not the seller.
- Enter what you have already bought from this seller in this financial year (April to date), without GST.
- Enter the new bill or payment, without GST, and its date.
- Choose whether the seller has given you a valid PAN.
- Read the TDS to deduct, the amount it is on, and what you pay the seller. Press Enter to move to the next box.
The rule in four lines
- Who deducts: a buyer whose total sales, gross receipts or turnover from business was more than ₹10 crore in the previous financial year.
- When: purchases of goods from one resident seller go above ₹50 lakh in the financial year.
- How much: 0.1% of the value above ₹50 lakh, or 5% if the seller has no valid PAN.
- Where: section 393(1), Table serial 8(ii) of the Income-tax Act 2025 from 1 April 2026; section 194Q of the 1961 Act for earlier purchases.[1] Verify
The ₹50 lakh is counted per seller and per financial year, and starts again at zero on 1 April. TDS is deducted when you credit the bill to the seller's account or when you pay, whichever comes first.
Worked example
A distributor's turnover last year was ₹12.6 crore. This year it has already bought ₹46,80,000 from one manufacturer. A new bill of ₹6,00,000 (before GST) arrives on 8 October 2026.
| Step | Amount |
|---|---|
| Purchases from this seller after this bill | ₹52,80,000 |
| Part above ₹50 lakh | ₹2,80,000 |
| TDS at 0.1% | ₹280 |
| Paid to the seller for this bill | ₹5,99,720 + GST |
Only ₹2,80,000 of this bill is above the limit, so TDS is on that part alone. Every later bill from the same seller this year has TDS on its full value. If the seller had no valid PAN, the TDS would be 5% of ₹2,80,000 = ₹14,000.
With or without GST?
Under 194Q, CBDT Circular 13/2021 said TDS at the time of credit is worked out on the value without GST, while TDS on an advance payment is on the full amount paid.[2] The calculator uses the value you type, so enter the amount before GST for a bill. Whether the circular has been repeated for section 393 is not confirmed yet. Verify
After you deduct
- Deposit the TDS by the 7th of the next month (30 April for deductions made in March).
- Report it in the quarterly TDS statement under the new section label for FY 2026-27.
- Give the seller the TDS certificate so they can claim the credit.
Sources
Checked on 17 Oct 2026. Official site: incometaxindia.gov.in.
- Income-tax Act 2025, section 393(1), Table serial 8(ii) (TDS on purchase of goods), in force 1 April 2026. Link pending
- CBDT Circular 13/2021, 30 June 2021, guidelines on section 194Q.
