CA Mohit Gaba

Mohit GabaANALYSIS OF TCS PROVISIONS, RULE 114B, RULE 114E

Section 206C has been amended w.e.f. 01/06/2016, whereby in case of Goods/Services, if invoice is more than 2 lakhs, then TCS will be applicable is any amount of sale consideration is received in cash. Brief Analysis of the Provisions is presented below. Sub-section 1D was inserted in Section 206C in 2012, when TCS was imposed on Sale of Jewellery and Bullion. Now it has been amended to include Sale of any other Goods/Services. Relevant provisions of the Section are reproduced below:

SECTION 206C

“(1D) Every person, being a seller, who receives any amount in cash as consideration for sale of bullion 35[***] or jewellery, or any other goods (other than bullion or jewellery) or providing any service, shall, at the time of receipt of such amount in cash, collect from the buyer, a sum equal to one per cent of sale consideration as income-tax, if such consideration,—

(i) for bullion, exceeds two hundred thousand rupees; or

(ii) for jewellery, exceeds five hundred thousand rupees; or

(iii) for any goods, other than those referred to in clauses (i) and (ii), or any service, exceeds two hundred thousand rupees:

Provided that no tax shall be collected at source under this subsection on any amount on which tax has been deducted by the payer under Chapter XVII-B.

(1E) Nothing contained in sub-section (1D) in relation to sale of any goods (other than bullion or jewellery) or providing any service shall apply to such class of buyers who fulfill such conditions, as may be prescribed.

(1F) Every person, being a seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding ten lakh rupees, shall, at the time of receipt of such amount, collect from the buyer, a sum equal to one per cent of the sale consideration as income-tax.”

♠ “seller” means

the Central Government, a State Government or any local authority or corporation or authority established by or under a Central, State or Provincial Act, or

any company or

firm or

co-operative society and

also includes an individual or a Hindu undivided family whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which the goods of the nature specified in the Table in sub-section (1) or sub-section (1D) are sold or services referred to in sub-section (1D) are provided.

♠ buyer” with respect to—

(i) sub-section (1) means a person who obtains in any sale, by way of auction, tender or any other mode, goods of the nature specified in the Table in sub-section (1) or the right to receive any such goods but does not include,—

(A) a public sector company, the Central Government, a State Government, and an embassy, a High Commission, legation, commission, consulate and the trade representation, of a foreign State and a club; or

(B) a buyer in the retail sale of such goods purchased by him for personal consumption;

(ii) sub-section (1D) 1[or sub-section (1F)] means a person who obtains in any sale, goods of the nature specified in the said sub-section;

TCS @ 1% to be collected even if no PAN is provided by the Purchaser. In that case Form 60 to be obtained from the Purchaser and Return in Form 61 also to be filed (if Tax Audit applicable). Deduction at higher rate in case PAN not available (Section 206AA) is not applicable for

TCS is applicable even if buyer buys goods for his personal consumption.

RULES 114B, 114C, 114D [Applicable w.e.f. 01/01/2016] (Requirement for Quoting PAN in specified transactions)

  • For General Transactions of Sale or Purchase of Goods or Services of any nature PAN to be quoted where amount exceeds Rs. Two lacs per transaction
  • For Sale or purchase of motor vehicle PAN to be quoted irrespective of amount.
  • For Sale of purchase of immovable property PAN to be quoted for amount > 10 lacs.
  • For Purchase of foreign currency in cash PAN to be quoted for payment exceeding Rs. 50000 at any one time.
  • For Payment in cash for services to Hotel or restaurant PAN to be quoted, against a bill exceeding Rs. 50,000 at any one time. For
  • PAN to be quoted for Payment in cash for services in connection with foreign travel exceeding Rs. 50000 at any time.

1. Limit of two lacs shall apply whether transaction is conducted in cash or cheque. However for payments to Hotel, restaurants, payments for foreign travel, foreign exchange while limit for cash transactions is Rs. 50,000, limit for non cash transactions only shall be two lacs.

2. PAN Reporting requirements is applicable for Goods/Services if Invoice Exceeds Rs. 2 lacs (whether payment received in cash or otherwise). However TCS applicable if any amount is received in cash.

3. A person who does not have PAN and enters into transaction specified in R. 114B shall make a declaration in F.60. Old Form 60 has been replaced with new Form 60.

4. Form 60 is required to be retained for six years from end of financial year (not assessment year) in which transaction is under taken. E.g. transaction for AY 2016-17 is undertaken in FY 2015-16, then Form 60 to be retained till 31-03-2022.

5. Form 61 statement (giving details of all Form 60 obtained in a Half Year), is required to furnished electronically by 30th April and 31st October for declarations received till 31st March and 30th September. For period 01/01/2016 to 31/03/2016, the date has been extended to 31st October 2016.

6. U/R 114C(2) , seller issuing bill to ensure after verification that PAN has been correctly furnished and mentioned in the document or that F.60 has been duly furnished with complete particulars where PAN is not available.

7. However all such sellers are not required to electronically furnish data about F. 60 to the department and it is only where audit is required u/s 44AB (including audit for presumptive taxation) that data is required to be furnished electronically in F. 61 besides retaining F.60 for six years from end of financial year.

8. Seller of Immovable Property and Seller of Motor Vehicles have to electronically furnish data in Form 61 (whether Tax Audit applicable or not)

9. Changes have also been made in Rule 114E, where Receipt of cash payment exceeding two lakh rupees for sale, by any person, of goods or services of any nature, is to be reported in Annual Information Return. This provision is applicable for any person who is liable for audit under section 44AB of the Income Tax Act.

10. Annual Information Return is to be filed by 31st May after the end of the Financial Year. Penalty of Rs.100/- per day can be imposed in case of delay. Return is to be filed online in Form 61A, on the Income Tax E-filing website.

Provisions of TCS, Rule 114B, Rule 114E, as applicable for general businesses are summarized as below:

In case of Immovable Property,

  1. AIR Reporting required if value exceeds Rs. 30 lacs, but PAN to be quoted if value exceeds Rs. 10 lacs.
  2. Responsilbility of Seller and Registering officer to ensure PAN is duly and correctly mentioned, or declaration in Form 60 duly furnished with complete particulars.
  3. Seller to file online Form 61, (if PAN of Purchaser not mentioned). Applicable to seller even if not liable to Tax Audit.
  4. AIR Reporting liability is of Inspector General/Registrar/Sub-Registrar
  5. TDS Applicable is value exceeds Rs. 50 lacs (Not Applicable on Agriculture Land).

In case of Goods/Services

  1. TCS applicable if any amount is received in cash , if invoice > 2 lacs. Applicable to all Firms/Companies/Co-op Society. Applies to Indl/HUF only if Sale in preceding year > Tax Audit Limit.
  2. PAN to be quoted if invoice > 2 lacs (whether cash or otherwise).
  3. AIR Reporting applicable if Cash Receipt > 2 lacs.
  4. 4. Filing Form 61 and AIR Reporting applicable only for Tax Audit cases (including Audit u/s 44AD presumptive taxation)

In case of Sale of Motor Vehicle (Other than Two Wheelers)

  1. AIR Reporting required if cash receipt exceeds Rs. 2 Lakhs. (If Seller liable for Tax Audit).
  2. PAN to be quoted irrespective of the amount. Responsilbility of Seller to ensure PAN is duly and correctly mentioned, or declaration in Form 60 duly furnished with complete particulars.
  3. Seller to file online Form 61, (if PAN of Purchaser not mentioned). Applicable to seller even if not liable to Tax Audit.
  4. TCS Applicable if Sale Consideration > 10 lacs, and Seller is Firm/Co/Co-op Society. TCS on Sale of Motor Vehicle not applicable if Seller is Individual/HUF.
  5. In my view Provisions of Sale of Motor Vehicles will be applicable even in case of Sale of Second Hand Motor Vehicles.

Penalty for Non Compliance

272B. (1) If a person fails to comply with the provisions of section 139A, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten thousand rupees.

For Filing Form 61 and Form 61A, create authorized user in E-filing website

  • On menu “Manage ITDREIN
  • An authorized user will be created and the a new user –id of the authorized user will be created.
  • Same user-id will be used to upload Form 61 and 61A on the IT E-filing website.

DUE DATES OF FILING TDS/TCS RETURNS

QUARTERDUE DATE FOR TCS RETURNS 27EQ

[RULE 31AA]

DUE DATE FOR TDS RETURNS 24Q, 26Q, 27Q [RULE 31A]
JUNE15th JULY31st JULY
SEPTEMBER15th OCTOBER31st OCTOBER
DECEMBER15th JANUARY31st JANUARY
MARCH15th MAY31st MAY

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