Finance Act, 2021 inserted Section 194Q in the Income Tax Act, 1961 requiring a buyer to deduct a certain sum from payment or credit of any sum to a seller, w.e.f 1.7.21. An Explanation to sub-section (1) of the said section stipulates that a ‘buyer” means a person whose “total sales, gross receipts or turnover” from business exceeds ten crore rupees in the immediately preceding previous year.
In this article, the Author has pointed out that the amounts of total sales or gross receipts or turnover of a person cannot be equal (same) in all cases and the Act does not provide which one of them would be the determining factor. He further points that these expressions have not been defined in the Act and are capable of differing interpretations. These factors make it difficult, in marginal cases illustrated in an example, to determine whether the provisions of section 194Q are applicable to a person.