Examine the applicability and determine the amount of tax deduction at source (TDS) as per the Income-tax Act, 1961 for the A.Y. 2025-26 in the…

(i) Since the turnover of Nexus Tech Pvt. Ltd. exceeds 10crores during the P.Y. 2023-24, it is required to deduct tax at source under section 194Q for paying any sum to a resident for purchase of goods of the value exceeding 50lakhs in a previous year, at the time of payment or credit, whichever is earlier. The rate of TDS would be 0.1% of sum exceeding 50lakhs. In case of non-furnishing of PAN, TDS @5% would be deducted as per section 206AA. TDS liability in respect of the purchases made by Nexus Tech Pvt. Ltd. is as follows – Purchase of raw material from Vendor A The threshold limit of 50lakhs is exhausted in July at the time of credit; accordingly, tax would be deducted by Nexus Tech Pvt. Ltd. on 10 lakhs, being the sum exceeding 50lakhs in July. Since Vendor A has not provided his PAN to Nexus Tech Pvt. Ltd., tax at higher rate of 5% would be deducted. Accordingly, the tax to be deducted by Nexus Tech Pvt. Ltd. would be - 50,000. Purchase of trading goods from Vendor B The threshold limit of 50lakhs is per resident seller per buyer. On purchase of trading goods from Vendor B, no tax is required to be deducted since the threshold of 50lakhs is not exhausted. (ii) Since the turnover of Mr. Sumit exceeds 1crore during the P.Y. 2023-24 and the contract payments made to ABC Ltd. exceeds - 1,00,000, the TDS provisions under section 194C would be attracted. The rate of TDS under section 194C is 2%. However, as per section 206AA, in case of non-furnishing of PAN, TDS @20% would be deducted. In the present case, ABC Ltd. has not provided its PAN to Mr. Sumit, hence, TDS@20% is applicable on 5,40,000 being the amount excluding GST as GST is separately mentioned. The amount of tax to be deducted by Mr. Sumit would be - 1,08,000.