Summary of TCS provisions and TDS on Purchase of goods

Explore a summary of important TCS provisions and a comparison of TDS on the purchase of goods. Understand Sections 194Q, 206C(1H), 206C(1F), and 206C(1G) with insights from the article.

The Article gives a summary of important TCS provisions and gives comparison of TDS on Purchase with TCS on Sale. Article explains Section 194Q (TDS ON Purchase of goods), Section 206C(1H): TCS on Sale of Goods, Section 206C (1F) : TCS on Motor Vehicles and Section 206C (1G) : TCS on foreign Tours.

Section 194Q (TDS ON Purchase of goods)

• The Section lays down that TDS should be deducted on purchase of goods of value exceeding 50 lacs from a Resident Supplier during the year
• TDS rate : 0.1%
• If Seller does not give PAN , TDS Rate is 5%
• Applicable to whom ?
  • It is applicable to Assessees whose turnover during the preceding year exceeds 10 Crs
• When to deduct ?
  • TDS to be deducted at the time of credit in the books or actual payment, whichever is earlier
  • A credit to any account like Suspense etc will be covered and TDS will apply
• If any other TDS provisions apply to a transaction, 194Q is not applicable
• If transaction is covered under 206C (except 206C(1H)), 194Q is not applicable
  • For example , if Alcoholic liquor, tendu leaves, scrap, motor vehicles etc purchased, 194Q not applicable ,
• But goods as per 206C(1H) are purchased , 194Q is applicable
• The TDS is to be deducted on the purchases in excess of Rs. 50 lacs
• For ex, if A purchases goods worth 52 lacs from B in a year , TDS will be deducted by A on 2 lacs only

Section 206C(1H): TCS on Sale of Goods

• The Section lays down that TCS should be collected on Sale of goods of value exceeding 50 lacs from a customer during the year
• TCS rate : 0.1%
• If buyer does not give PAN or aadhar, TCS rate is 1 %
• Buyer ?
  • Buyer does not include Government, local Authorities and importer of goods
• TCS to be collected at the time of receipt of amount from the buyer for Sale of goods
• Applicable to whom ?
  • It is applicable to Assessees whose turnover during the preceding year exceeds 10 Crs
• The TCS is to be collected on the Sales in excess of Rs. 50 lacs @ 0.1%
• For ex, if A sales goods worth 52 lacs to B in a year , TCS will be collected by A on 2 lacs only
• Exceptions : The section does not apply to
  • Export of goods
  • Sale of Tours, motor vehicles or goods covered u/s 206C(1)

• If buyer is liable to deduct TDS on purchases , then on such transactions the seller need not collect TCS
• Hence if 194Q is applicable, 206C(1H) is not applicable to seller

Purchase of goods

Section 206C (1F) : TCS on Motor Vehicles

• This Section lays down that every seller will collect TCS @ 1% from the buyer on sale of Motor Vehicles if Value exceeds Rs. 10 lacs
• Hence following conditions :
  • Sale of Motor Vehicle
  • Value of MV > 10 lacs
  • TCS @ 1 % on Full Sale Value
• Exceptions : TDS will not apply for Following buyers :
  • Government bodies, local Authorities and a Public Sector Company engaged in passenger transport business

Section 206C (1G) : TCS on foreign Tours

• Any person selling overseas tour package has to collect TCS @ 20% from the buyer
• When to collect ?
  • At the time of debit in books or receipt of money whichever is earlier
• Overseas Tour package ?
  • It is package which offers visit to a country or territory outside India
  • It includes expenses on travel, Hotel lodging and boarding, site seeing etc
• The provisions of this section will not apply if buyer is liable to deduct TDS on such transactions and has deducted it
• So actual deduction by buyer is necessary , else TCS applies
• Section not applicable if buyer is Government or local authorities
• Note : The section applies only if Foreign tour starts from India.

The section applies even if buyer is non resident.