Section 206C of the income tax Act has been proposed to be amended by Finance Bill 2020. Section 206C deals with TCS (Tax Collected at Source). Budget 2020 has proposed to insert Sub-Section 1G and 1H to Section 206C to expand the Scope of TCS to TCS on foreign remittance through Liberalised Remittance Scheme (LRS) and on selling of overseas tour package as well as TCS on sale of goods over a limit. Article explains the newly inserted provisions related to TCS. 

TCS New Provisions

Read Bare Action Provisions related to TCS–  TCS: Remittance through LRS, foreign tour package sell & sale of goods

Nature of Transaction Who will collect When TCS will be collected Prescribed Limit Non – Applica-bility TCS Rate Remarks
Sub-section (1G)

a) remittance out of India under the LRS of RBI

An Authorised Dealer At the time of receipt of the amount, or At the time of debiting the amount payable Whichever is earlier Seven lakh or more in a FY 1. If the buyer is liable to deduct TDS under any other provisions and has deducted

2. If a buyer is CG, SG, an embassy, a high commission,  a legation, a commission, a consulate, the trade represen-tation of a foreign state, a local authority or any other person as notified by CG

5% The benefit of sub-section 6A is not available
Sub-section (1G)

b) Overseas tour program package

Seller of the package NA 5% The benefit of sub-section 6A is not available
Sub-section (1H) Sale of any goods (except goods on which TCS applicable specifically) Seller of any goods whose turnover in the previous year exceed ten crore rupees At the time of receipt of any amount as consideration for the sale of such goods Exceeding 50 Lakh in a FY 1. If the buyer is liable to deduct TDS under any other provisions and has deducted

2. If buyer is CG, SG, an embassy, a high commission,  a legation, a commission, a consulate, the trade represen-tation of a foreign state, a local authority or any other person as notified by CG

0.1% 1. The benefit of sub-section 6A is not available

2. In the case of non-availabilty of PAN or Aadhar of the buyer, TCS rate will be 1%

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11 Comments

  1. Prakash says:

    Hi
    Can any one explain below for insertion of section 206(1H) TCS on sale of goods-
    1. compliance related to the TCS (remittance due date and returns)
    2. Whether credits will be available in 26AS for TCS paid to seller.

    1. cavijaykg says:

      My answer is ‘No’.

      Service receiver already liable to deduct TDS on maximum services. looking to that, IT Act is silent about to ‘Service’.

    1. cavijaykg says:

      Hi Anju,

      It is clearly mentioned that goods, on which TCS applicable specifically (sub-section 1, 1F, 1G), then new provision of sub-section 1(h) is not applicable.

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