Section 194Q didn't disappear — it became Section 393, and the ₹50-lakh threshold hasn't moved

Ask any Surat trading or manufacturing firm above a certain size what "Section 194Q" means, and most accounts teams answer without pausing — deduct 0.1% if you're buying more than ₹50 lakh a year from one supplier. That answer has been correct since July 2021. It just stopped being filed under the right section number on 1 April 2026, when the Income-tax Act, 2025 replaced the 1961 Act in full and moved almost every TDS provision to a new address.

For a firm that was already deducting this TDS, nothing about the arithmetic changes. What changes is where the rule sits, what happens if you get it wrong, and — for anyone who sells as well as buys in bulk — one genuine simplification worth knowing about.

The same test, a new section number

Section 194Q of the old Act is now Section 393(1), Table 1, Serial No. 8(ii) of the Income-tax Act, 2025 — the single consolidated table that now carries almost every TDS provision that used to sit under its own separate section (194C, 194H, 194J, 194Q and the rest). The trigger for this particular row is exactly what it always was: if your business's turnover in the immediately preceding year crossed ₹10 crore, you must deduct tax at 0.1% on payments for goods bought from any one resident seller once that seller's total for the year crosses ₹50 lakh — and only on the amount above ₹50 lakh, not the whole purchase.

Plain-language example: a Ring Road fabric wholesaler with last year's turnover of ₹15 crore buys ₹80 lakh of grey cloth from a single Bhiwandi mill during the year. Once that running total crosses ₹50 lakh, TDS at 0.1% applies to the ₹30 lakh above it — ₹3,000 to deduct and deposit, cited this year as Section 393(1) rather than 194Q. If your accounting software's TDS drop-down still says "194Q", that's a settings problem, not a legal one — the deduction itself doesn't wait for the software update.

The Income-tax Act, 2025 renamed almost every TDS section a business owner has ever heard of. It changed almost none of the amounts.

The date the new number takes over also matters more than it looks. Section 393 applies to purchases where the credit or the payment — whichever falls first — happens on or after 1 April 2026. A purchase made in February 2026 is still governed by the old Section 194Q, even if you only reconcile that TDS return later this year. Keep FY 2025-26 purchases and Tax Year 2026-27 purchases tagged separately in your books — mixing the two under one section reference is already a common reconciliation error this year.

One provision didn't move — it disappeared

Before this renumbering, a Surat yarn or fabric trader selling more than ₹50 lakh of goods to one buyer in a year had to think about both sides of the same transaction: was the buyer deducting TDS under 194Q, or did the seller need to collect TCS under the old Section 206C(1H)? The law said only one of the two applied to a given sale, but working that out sale-by-sale, buyer-by-buyer, was a genuine compliance headache for firms that both bought and sold in bulk.

That overlap is gone for good reason. The Finance Act, 2025 inserted a proviso making Section 206C(1H) inapplicable from 1 April 2025 — a full year before the Income-tax Act, 2025 itself came into force — and the new Act carries no replacement for it anywhere in its TDS or TCS tables. A seller in Surat no longer collects TCS on the sale of goods at all, whatever the sale value. The only question left, on a domestic sale of goods, is whether the buyer's own turnover and purchase value trigger their Section 393 deduction — which is the buyer's problem to manage, not the seller's.

No PAN on file, no 0.1% rate

The old Sections 206AA and 206CC — which forced a higher TDS or TCS rate whenever the other side hadn't furnished a PAN — are now merged into Section 397(2). For a purchase covered by Section 393, that means a seller who hasn't given you a valid PAN gets deducted at 5%, not 0.1%, on the amount above ₹50 lakh; a declaration under Section 393(4) isn't even valid without a PAN attached to it.

This is worth acting on before the purchase order goes out, not after the invoice arrives. Plenty of Surat's smaller job-workers, dyeing units and unorganised suppliers still don't share a PAN with every buyer as a matter of routine — ask the accounts team to check which of your regular high-value suppliers are missing one on file, and get it before the running total for that seller crosses ₹50 lakh.

Get it wrong, and the cost isn't just interest

The old Section 40(a)(ia) — the disallowance rule that follows every missed or late TDS deduction — is now Section 35(b). The mechanics haven't changed: if TDS on a purchase covered by Section 393 isn't deducted, or is deducted but not deposited by the return-filing due date, 30% of that purchase value is disallowed as a business expense while computing that year's profit. That isn't a separate penalty — it directly inflates the taxable income you report, on top of any interest for the delay itself.

Concrete example: a Surat diamond-cutting unit buys ₹90 lakh of rough stones from one domestic supplier in a year and simply doesn't deduct TDS on the ₹40 lakh above the threshold. Come assessment, ₹12 lakh — 30% of that ₹40 lakh — gets added back to taxable profit, whether or not the unit ever collects the ₹4,000 of TDS it should have deducted in the first place. There is a fallback: if the seller has already reported that sale in their own return and paid tax on it, a chartered accountant's certificate confirming this can prevent the disallowance. It is a genuine relief provision, but it means asking your seller for cooperation after the fact — deducting correctly the first time avoids needing it at all.

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This article is general information, not professional advice. Rules change; verify current provisions or contact the office for advice on your situation.