Tax Collected at source (TCS) is Income Tax which is required to be collected by the seller (Collector) from the Buyer along with the Price of Goods and applicable taxes. Provisions relating to tax Collected at Source has been enumerated in section 206C of the Income Tax Act, 1961. There are various goods on which tax has to be collected at source which is given below :-
|Sl No.||Sub Section||Goods Covered|
|1.||(1)||Alcoholic Liquor for Human Consumption, Tendu Leaves, Timber obtained under Forest Lease, Timber obtained by any other mode, Any other Forest Produce, Scarp, Coal or lignite or iron ore|
|2.||(1C)||Lease of following :- Parking Lot, Toll Plaze, Mining & Quarrying|
|3.||(1F)||Sale of Motor Vehicle exceeding 10 Lakhs|
|4.||(1G)||Amount received by the Authorised Forex Dealer under Liberalised Remittance Scheme (LRS) of FEMA|
|5.||(1H)||All Goods except the above mentioned goods|
In the Finance Act, 2020 new sub section (1H) has been inserted in the above section which is applicable W.E.F 01st October 2020, for covering the remaining goods which are not covered above. Therefore it can be said that this Sub section is a General Collection sub-section under which all the goods are covered which are not covered above.
Before going to the explanation let us have a look into the Bare Act of Sub section (1H) :-
(1H) Every person, being a seller, who receives any amount as consideration for sale of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, other than the goods being exported out of India or goods covered in sub-section (1) or sub-section (1F) or sub-section (1G) shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 0.1 per cent of the sale consideration exceeding fifty lakh rupees as income-tax:
Provided that if the buyer has not provided the Permanent Account Number or the Aadhaar number to the seller, then the provisions of clause (ii) of sub-section (1) of section 206CC shall be read as if for the words “five per cent”, the words “one per cent” had been substituted:
Provided further that the provisions of this sub-section shall not apply, if the buyer is liable to deduct tax at source under any other provision of this Act on the goods purchased by him from the seller and has deducted such amount.
Explanation.—For the purposes of this sub-section,—
“Buyer” means a person who purchases any goods, but does not include,—
1. the Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or
2. a local authority as defined in the Explanation to clause (20) of section 10; or
3. a person importing goods into India or any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein;
(b) “Seller” means a person whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the sale of goods is carried out, not being a person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.
A perusal of the above provisions of Sub Section (1H) of section 206C would reveal the following 4 Point summary for applicability of the provisions :-
Implementation of Provision for compliance :-
|Sl No.||Quarter Ending||Due date of Submission of TCS Return|
|1.||30th June||15th July|
|2.||30th September||15th October|
|3.||31st December||15th January|
|4.||31st March||15th May|
|Sl No.||Quarter Ending||Due date of Issuance of TCS Certificate|
|1.||30th June||30th July|
|2.||30th September||30th October|
|3.||31st December||30th January|
|4.||31st March||30th May|
Frequently Asked Question :-
Q.1 Whether for calculating the Turnover Limit of Rs 10 Crore , Turnover relating to services would also be included ?
Ans. Yes, in the Turnover Criteria of Rs 10 Crore both the Turnovers i.e Goods and Services would be taken into account for calculating the applicability of the provisions.
Q.2 Whether for calculating the threshold limit of Rs 50 lakhs per Customer , Turnover relating to services would also be included ?
Ans. No, turnover/Gross Receipt of Service with the Identified Customer need not be taken in account for calculating the Threshold limit of Rs 50 lakhs.
Q.3 Whether in case of Goods being returned (Issuance of Credit Note) the TCS collected has also to be reversed ?
Ans. No, TCS once collected has to be deposited to the credit of Govt and the Buyer can take credit of the same while assessing the Advance Tax/Final tax Liability
Q.4 Whether TCS shall be collected by the seller where the buyer is also obliged to deduct TDS on payment being made ?
Ans. No TCS shall be collected where the buyer is obliged to deduct TDS on payment being made, as specifically said in the 2nd Proviso to sub section (1H).
Q.5 Whether TCS has to be collected on the amount of sale including GST ?
Ans. Yes, TCS has to be collected on amount including GST. Several courts have previously unanimously held regarding TDS that No tax can be deducted on amount of VAT/Service tax/GST. Further CBDT vide Circular No. 23/2017 dated 19th July 2017 has clarified that no tax shall be deducted under chapter XVII-B on amount of GST, however the above clarification relates to Chapter XVII-B whereas the provisions relating to TCS has been enumerated under Chapter XVII-BB . Therefore TCS has to be collected on amount of GST also.
Q.6 Whether TCS is required to be collected on amount of Sales during the period 01.04.2020 to 30.09.2020 ?
Ans. No, TCS would not be required to be collected on sales made prior to 1st October 2020, however TCS would required to be collected on amount outstanding as on 30th Sept 2020 of the identified Customer in case the Turnover or the estimated turnover during the Financial year exceeds 50 lakhs.