Income tax TCS provision on sale of goods applicable from 01st Oct 2020 with FAQ
Insertion of subsection – 206 (1H) in the finance Act 2020
Section 206 (1H) read as follows
(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 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 and has deducted such amount.
Explanation.––For the purposes of this sub-section,––
(a) “buyer” means a person who purchases any goods, but does not include,––
(A) the Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or
(B) a local authority as defined in the Explanation to clause (20) of section 10; or
(C) 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.’;
(II) in sub-section (2), for the words, brackets, figures and letter “sub-section (1) or sub-section (1C)”, the words “this section” shall be substituted;
(III) in sub-section (3), for the words, brackets, figures and letter “sub-section (1) or sub-section (1C)”, the words “this section” shall be substituted;
(IV) in sub-section (6A), in the first proviso, for the words “in accordance with the provisions of this section”, the words, brackets, figures and letter “in accordance with the provisions of sub-section (1) and sub-section (1C)” shall be substituted;
(V) in the Explanation, in clause (c),––
(i) for the word “means”, the words, brackets, figures and letter “with respect to sub-section (1) and sub-section (1F) means” shall be substituted;
(ii) for the words, brackets, letters and figures “the monetary limits specified under clause (a) or clause (b) of section 44AB”, the words “one crore rupees in case of business or fifty lakh rupees in case of profession” shall be substituted.
1. Whom TCS is applicable ?
Only those seller whose total sales, gross receipts or turnover from the business carried on by it exceed Rs. 10 crore during the financial year immediately preceding the financial year, shall be liable to collect such TCS.
As of now the term not clearly defined to be include GST for the purpose of computation. Section denotes that “a seller, who receives any amount as consideration for sale of any goods“. So GST may also consider for this purpose. However CBDT clarification is required. With that two view example are as follows
|Particulars||With GST||Without GST|
|Sales of Goods (A)||6,000,000||6,000,000|
|GST @ 18% (B) = A* 18%||1,080,000||1,080,000|
|Total Invoice value C= A+B||7,080,000||7,080,000|
|TCS @ 0.075% D= C*0.075%||5,310|
|TCS @ 0.075% D= A*0.075%||4,500|
|* Original TCS rate 0.1% , however till 31st March 2020 its 0.075%|
2. When to collect the TCS ?
TCS has to be collected at the time of receipt of such amount i.e. TCS shall be collected on Receipt Basis.
3. What is the applicable TCS rate?
|Particulars||Upto 31st Mar21||From 01st Apr’21|
|PAN / Aadhaar Available|
4. For Whom TCS will not be applicable ?
i. Where the buyer is the Central Government, State Government, Embassy, High Commission, legation, or trade representation of a foreign state.
ii. Where any TDS provision is applicable to such goods. (refer section 206C)
iii. Where the turnover of the Seller is less than 10 crore in the preceding Financial Year.
iv. Where the goods are exported out of India.
v. Where the buyer is a local authority as per Explanation to Section 10(20).
5. Incase of Sales return, is it required to return the TCS amount?
No, Based on the Sales amount applicable TCS calculated and would have remitted to Govt and it will appear in form 26AS of the customer account.
So customer needs to advised accordingly.
6. When the amount to be remitted to government ?
The TCS collection required to be paid in the following month on or before 07th . For example Oct 2021, Collected TCS amount to be remitted on or before 07th November 2020.
7. Whether any Quarter return to be filed?
The Quarterly TCS return to be submitted i.e Form 27EQ. and due date of each Quarter are as follows
|April to June ( Q1 of FY)||15th July|
|July to September ( Q2 of FY)||15th October|
|October toDecember ( Q3 of FY)||15th January|
|January to March ( Q4 of FY)||15th May|
Disclaimer: The content of this document is for general information purpose only. The Author shall not accept any liability for any decision taken based on the advice. You should carefully study the situation / or relevant section before taking any decision.