Expansion of TCS (Tax Collected at Source) Compliance under Income Tax. 

Eligibility: – Sale of any goods above INR 50 Lacs; and Turnover of INR 10 Crore and above during FY 2019-20.

Law: – It is proposed to levy TCS on sale of goods as per section 206C (IT Act) at the rate of 0.1% on consideration received from buyer in excess of INR 50 Lacs in a Financial Year. However such provision would apply only if total sales, gross receipts or turnover of seller from the business carried on by it exceeds INR 10 Crore during the immediately preceding the FY. Further, In case PAN or Adhaar is not provided by the buyer, the tax would be collected at 1% instead of 0.1% by the seller.

Exceptions: – The above provision would not apply where

  • the buyer is liable to deduct TDS under any other provisions of the Act like Alcoholic Liquor for Human Consumption, Scrap, Minerals etc. and has deducted such amount; or
  • the buyer is the Central/State Govt., an embassy, a High Commission, Legation, Consulate, the trade representative of foreign state, local authority; or
  • any class of person notified by the Central Govt. in the official gazette for the purpose subjects to such condition as specified in that notification.

Illustration:- 

S. No. Transaction Before 01st Oct 2020 After 01st Oct 2020
1 Sold goods on 15th May 2020 amounting to INR 20 Lacs and receipt consideration on 18th July 2020 No TCS No TCS
2. Sold goods on 15th October 2020 amounting to INR 10 Lacs and receipt consideration on 18th October, 2020 No TCS No TCS
3 Sold goods of INR 70 Lakhs on 28th Oct, 2020 and receipt consideration on INR 55 Lacs on 05th November, 2020 No TCS TCS will be applicable

As the aggregate value of total sales is INR 1 crore (20+10+70), exceeding the INR 50 Lakhs in the FY 2020-21

TCS will be applicable on 55 lacs on 05th November, 2020

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5 Comments

  1. tribhuvan purohit says:

    Sir, Sale of a particular goods to A single vendor under our two different GSTIN Numbers having a similar pan exceeds (say 35 lakhs from A state GSTIN + 20 lakhs from B state GSTIN = 55 Lakhs) whether TCS Clause of 50 Lakhs applicable

    1. GSINGLA says:

      Hi Tribhuvan Purohit,

      As per section 206C TCS would be applicable at the rate of 0.1% on consideration received from buyer in excess of INR 50 Lacs in a Financial Year. This section clearly states about sale consideration received from buyer.
      Hence TCS would be charged in this case.

  2. Lalit says:

    Sir
    Please let me know that we are tcs on vehicle sales above 10 lakh whether it would be continue or not required after this rule came
    Into applicable.

    1. CA Gaurav Singla says:

      Yes, it would be continue.
      Please read exception no.1 “the buyer is liable to deduct TDS under any other provisions of the Act”

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