1. Applicability of Section 194Q TDS (Income Tax)

• Section 194Q applies on purchases of goods by a buyer (whose turnover exceeds ₹10 crore in the preceding financial year) from a resident seller, where the purchase value exceeds ₹50 lakh in a year.
• However, supply from a SEZ (Special Economic Zone) unit to a PSU in the Domestic Tariff Area (DTA) is treated as an import of goods under SEZ rules.
• As per the CBDT Circular No. 13/2021, TDS under Section 194Q does not apply in cases where tax is collectible under Section 206C(1H) or where the transaction is in the nature of import.
• Conclusion: No TDS under section 194Q is deductible by the PSU on purchases made from a SEZ unit if the transaction qualifies as import.

2. Applicability of GST TDS

• GST TDS under section 51 of CGST Act applies when the recipient (e.g., PSU) is a specified person and makes payment to the supplier of taxable goods or services, where contract value exceeds ₹2.5 lakh.
• However, GST TDS is not applicable on imports (including deemed imports such as supplies from SEZ to DTA).
• Moreover, if the SEZ is charging BCD, SWC, and IGST, the supply is considered as a customs-cleared import, and hence not liable for GST TDS.

3. Invoice with BCD, SWC, and IGST

• An invoice that includes Basic Customs Duty (BCD), Social Welfare Surcharge (SWC), and GST indicates the treatment of the transaction as an import under Customs law, not a domestic supply under GST.
• Hence, no GST TDS is applicable.

Position:

• Section 194Q TDS: Not applicable, as supply from SEZ to DTA is considered as import.
• GST TDS: Not applicable, since it’s an import transaction.