Updated FAQs on TCS on sale of Goods U/s 206C (1H)

Tax Collected at Source (TCS) is the tax payable by a seller which he collects from the buyer. The rate of TCS is different for goods specified under different categories. Section 206C of the Income Tax Act, 1961 specifies the categories of goods on which seller has to collect tax from the purchasers.

As you are already aware, sub-section (1H) has been inserted in Section 206C by Finance Act, 2020 for collection of TCS by the seller on sale of any goods. Though collection of TCS on sale of certain goods was already covered under different sub-sections of Section 206C, however all the remaining goods, which were not so covered under other provisions of section 206C, have now been brought under the ambit of TCS by inserting sub-section (1H) in Section 206C.

TCS on Sale of Goods

The provisions of sub-section (1H) of section 206C has been made effective from 1st October 2020 and state that:

  • A Seller of Goods is liable to collect TCS from Buyer on Sale of any goods;
  • Turnover of seller is more than ₹ 10 Crores in preceding financial year;
  • TCS to be collected if the Value/Aggregate Valuereceived for Goods from a buyer is more than ₹ 50 Lakhs in a financial year;
  • TCS to be collected on [ Total Sale Value received – ₹ 50 Lakhs];
  • Rate of TCS is 0.1%, if PAN of buyer is available [1% if PAN not Available].

Considering the doubts being raised by trade & industry in relation to interpretation and compliance of the newly introduced provisions, Central Board of Direct Taxes [CBDT] has come up with a slew of clarifications by way of Circular 17/2020 dated 29th September 2020 and press release dated 30th September 2020.

In this document, we have compiled a list of compliances and obligations on the part of seller as well as a detailed checklist of actions that needs to be performed by the seller before the provisions are made effective. This document also contains detailed FAQs that will seek to dispel any doubts that one may have regarding the stated provisions.

FAQs:

Q.1 What is the meaning of Seller under the provisions of section 206C(1H)?

Ans. Here, Seller means a person whose Total Sales, Turnover, Gross Receipts from the business being carried out by him in preceding Financial Year exceeds ₹ 10 Crores.

The term turnover has not been specifically defined in the sub-section. In the “Guidance Note on Terms used in Financial Statements” published by ICAI, “the expression “Sales Turnover” has been defined as: “The aggregate amount for which sales are affected or services rendered by an enterprise.

In the statement issued by ICAI on the CARO the word ‘turnover’ has been defined as under- “The term ‘turnover’ for the purposes of this clause may be interpreted to mean the aggregate amount for which sales are effected or services rendered by an enterprises”.

Q. 2 Whether sales consideration includes GST component?

Ans. Clarification provided by CBDT on 29th September 2020 states that “it is hereby clarified that no adjustment on account of sale return or discount or indirect taxes including GST is required to be made for collection of tax under sub section (1H) of section 206C of the Act since the collection is made with reference to receipt of amount of sale consideration.” Thus, the intent is to have the TCS on sales consideration collected including GST.

Q. 3 Whether TCS to be collected on total sales value to the buyer to whom sales in excess of ₹ 50 Lakhs has been made or only to the amount in excess of ₹ 50 Lakhs?

Ans. Section 206C(1H) envisages that TCS at the rate of 0.10% of the sale consideration received in excess of ₹ 50 Lakhs shall be collected by the seller. As such, TCS shall be collected on Total Sale Value received less ₹ 50 lakh.

Q. 4 For calculating the amount of sales of ₹ 50 Lakhs, whether the sales before 01-10-2020 shall be considered?

Ans. This section was introduced by way of Finance Act 2020 and was initially to be made effective from 01-04-2020 i.e. from the beginning of the financial year 2020-21. Now, since, it is being made effective from 01-10-2020 i.e. middle of the FY 2020-21, the pertinent question that arises is whether the consideration received for sales effected up to 30-09-2020 shall be considered while determining the threshold of ₹ 50 Lakh.

Now, CBDT has clarified that since the threshold of ₹ 50 Lakh is with respect to the financial year, calculation of receipt of sale consideration for triggering TCS under sub-section (1 H) of section 206C shall be computed from 1st April 2020. Hence, if a person being seller has already received ₹ 50 Lakh or more up to 30th September 2020 from a buyer, the TCS under sub-section (1H) of section 206C shall apply on all receipt of sale consideration during the previous year, on or after 1st October 2020, from such buyer.

CBDT has further issued a Press Note on 30-09-2020 to provide that TCS shall be applicable only on the amount received on or after 01-10-2020.

Illustration 1: Sales made to a buyer is less than ₹ 50 Lacs up to 30-09-2020

1. Sales up to 30-09-2020 ₹ 35 Lacs
2. Amount received up to 30-09-2020 ₹ 25 Lacs
3. Invoices raised from 01-10-2020 ₹ 30 Lacs

As TCS shall be applicable beyond receipts of ₹ 50 Lacs. Therefore, on the initial receipt of ₹ 25 Lacs after 01-10-2020, TCS shall not be applicable. Consequently, TCS shall be applicable as and when ₹ 15 Lacs [₹ 35 Lacs + ₹ 30 Lacs – ₹ 50 Lacs] shall be received.

Illustration 2: Sales made to a buyer is more than ₹ 50 Lacs up to 30-09-2020:

1. Sales up to 30-09-2020 ₹ 65 Lacs
2. Amount received up to 30-09-2020 ₹ 30 Lacs
3. Invoices raised from 01-10-2020 ₹ 20 Lacs

As TCS shall be applicable beyond receipts of ₹ 50 Lacs. Therefore, on the initial receipt of ₹ 20 Lacs after 01-10-2020, TCS shall not be applicable. Consequently, TCS shall be applicable as and when ₹ 35 Lacs [₹ 65 Lacs + ₹ 20 Lacs – ₹ 50 Lacs] shall be received.

Illustration 3: Amount received from a buyer is more than ₹ 50 Lakh up to 30-09-2020:

1. Sales up to 30-09-2020 ₹ 65 Lacs
2. Amount received up to 30-09-2020 ₹ 55 Lacs
3. Invoices raised from 01-10-2020 ₹ 20 Lacs

As TCS u/s 206C(1H) shall be effective from 01-10-2020, therefore TCS cannot be charged on collections made prior to 01-10-2020. Therefore, in this case, TCS shall be charged on the receipt of amount on or after 01-10-2020 i.e. on ₹ 30 Lacs [₹ 65 Lacs + ₹ 20 Lacs – ₹ 55 Lacs].

Q. 5 What is the meaning of the buyer?

Ans. Any person who purchases any Goods but does not include:

  • the Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State
  • a local authority
  • a person importing goods into India

Q. 6 Whether TCS shall be collected on any kind of sales including sale of services?

Ans. TCS shall be collected on sale of goods only.

Q. 7 Whether the consideration amount will be at FOB/CIF?

Ans. It would depend upon the terms of the contract. If the contract is on CIF basis, the consideration will include insurance and freight.

Q. 8 Whether TCS shall be collected on export of goods?

Ans. No, TCS shall not be collected on export sales being made outside India.

Q. 9 For calculating the limit of ₹ 10 crore in the preceding financial year, whether sale of services to be included?

Ans. For calculating the threshold limit of ₹ 10 crore in the preceding financial year, section 206C(1H) provides that Total Sales, Turnover, Gross Receipts from the business shall be considered. As such, the receipts of sale of services shall also be considered.

Q. 10 In the case of non-availability of PAN or Aadhaar of the buyer, what shall be rate at which TCS to be collected?

Ans. Section 206C(1H) specifically provides that TCS shall be collected at the rate of 1% of sale consideration in case buyer of the goods fails to provide its PAN. Provisions of section 206CC have been specifically overruled by section 206C(1H).

Q. 11 Whether TCS shall be collected at the time of debiting the buyer with the sale value or at the time of collection?

Ans. Section 206C(1H) specifically provides that the seller shall collect from the buyer a sum equals to 0.1% of the sales consideration at the time of receipt of such amount. That means the liability to collect TCS will arise even in case of advance payment received though the goods will be physically delivered at a later date.

Further, CBDT by way of press release dated 30-09-2020 has also clarified that in order to simplify and ease the compliance of the collector, it may be noted that this TCS provisions shall be applicable on the amount of all sale consideration received on or after 01-10-2020, without making any adjustment for the amount received in respect of sales made before 01-10-2020.

Q.12 Since, TCS to be collected on advance payments, what shall be the course of action in case, the advance has to be refunded as the sale is not affected?

Ans. Where the seller receives an advance for selling the goods and he deposits the TCS thereon, however later on such deal stands cancelled, in such a case, post month-end, no refund of the TCS can be made to a buyer. Even if it is collected on higher amount, the same will be deposited with the government. The buyer can claim credit for the TCS amount while depositing Advance Tax and/or determining the final tax liability.

CBDT has also clarified that no adjustment on account of sales return or discount or indirect taxes including GST is required to be made for collection of tax under sub-section (1H) of section 206C of the Act since the collection is made with reference to receipt of amount of sale consideration.

Q. 13 Whether the rate of TCS shall be reduced by 25% in line with the Covid-19 relief measures announced by the government?

Ans. As part of relief measures undertaken by the Central Government on 12-05-2020, it was announced that in order to provide more funds at the disposal of the taxpayers, the rates of TDS for non-salaried specified payments such as payment for contract, professional fees, interest, rent, dividend, commission, brokerage etc. made to residents and rates of TCS for specified receipts shall be reduced by 25% of the existing rates. This reduction was made effective from 14-05-2020 up to 31-03-2021.

Therefore, in line with the same rate of TCS u/s 206C(1H) shall also be reduced by 25% i.e. rate at which TCS to be collected shall be 0.075% up to 31-03-2021.

Q. 14. Whether TCS shall be collected by the seller where the buyer is also obliged to deduct TDS on payments being made?

Ans. Second proviso to section 206C(1H) specifically provides that this sub-section shall not apply where 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.

Q. 15. Whether TCS to be collected on the amount of sale including GST?

Ans. Central Board of Direct Taxes (‘CBDT’) vide Circular No. 23/2017 dated July 19, 2017 has clarified that no tax shall be deducted under Chapter XVII-B, if the GST on services is indicated separately. The above clarification issued by the CBDT covers only tax deduction under chapter XVII-B, whereas section 206C of the Act is governed by Chapter XVII-BB.

Further, the FAQ issued by the Income Tax Department on TCS provides that the “amount debited to the account of buyer or payment shall be received by seller inclusive of VAT /Excise /GST. As such, TCS to be collected on inclusive of GST.”

Further CBDT has clarified on 29th September 2020 that TCS need to be discharged on sales consideration received and no adjustment on account of GST is to be done.

Q. 16. Whether GST to be charged by the seller on the amount of sale including TCS?

Ans. Corrigendum to CBEC Circular No. 76/50/2018-GST issued on 07-03-2019 provides clarifications on certain issues that includes valuation methodology in case of TCS under Income Tax Act. In this matter, it states that Section 15(2) of the CGST Act specifies that the value of supply shall include ‘any taxes, duties, cesses, fees and charges levied under any law for the time being in force other that GST Laws.

Further, it clarified that for the purpose of determination of value of supply under GST, TCS under the provisions of Income Tax Act, 1961 would not be includible as it is an interim levy not having the character of tax.

Q. 17. How and when to charge TCS from buyer?

Ans.

  • Alternative 1- The TCS can be collected by charging through invoice:

In this case, both buyer and seller need to do accounting as receivable and payable for these amounts. It may be noted that if the payment is being made in next financial year, TCS obligation may not be applicable on seller (due to turnover threshold) or may not be applicable on buyer due to not making payments breaching ‘collection’ threshold in that financial year. In those case, one need to keep track and write off and reconcile it with the liability.

  • Alternative 2: The TCS can be collected by charging through debit note:

The logic for issuance of debit note may be that debit note to be issued at the time of payment so that it can be charged only on the eligible cases and no hassles of write off etc. (as mentioned in above points). But in that case, a specific series of debit note number may need to be used to make sure that these debit notes do not create issues in GST compliance.

Q. 18. Whether this sub-section shall also apply on sale of motor vehicle:

Ans. The provisions of sub-section (1F) of section 206C of the Act apply to sale of motor vehicle of the value exceeding ₹ 10 Lakh. Further, Sub-section (1H) of section 206C of the Act exclude from its applicability goods covered under sub-section (1F). It may be noted he scope of sub-sections (1H) and (1F) are different. While sub-section (1F) is based on single sale of motor vehicle, sub-section (1H) is for receipt above ₹ 50 Lakh during a financial year against aggregate sale of good. While sub-section (1F) is for sale to consumer only and not to dealers, sub-section (1H) is for all sale above the threshold.

In this regard it CBDT has clarified that –

  • Receipt of sale consideration of motor vehicle from a dealer would be subjected to TCS under sub-section (1H) of the Act, if such sales are not subjected to TCS under sub-section (1F) of section 206C of the Act.
  • In case of sale to consumer, receipt of sale consideration for sale of motor vehicle of the value of ₹ 10 Lakh or less to a buyer would be subjected to TCS under sub-section (1H) of section 206C of the Act, if the receipt of sale consideration for such vehicles during the financial year exceeds ₹ 50 Lakh during the financial year.
  • In case of sale to consumer, receipt of sale consideration for sale of motor vehicle of the value exceeding ₹ 10 Lakh would not be subjected to TCS under sub-section (1H) of section 206C of the Act if such sales are subjected to TCS under sub-section (1F) of section 206C of the Act.

Q. 19. Whether this sub-section shall also apply to fuel supplied to non-resident airlines:

Ans. In this regard, CBDT has clarified that the provisions of sub-section (1H) of section 206C of the Act shall not apply on the sale consideration received for fuel supplied to non-resident airlines at airports in India.

Q. 20. What are the compliance obligations cast upon business entities due to sec 206C(1H):

Ans. Some of the basic compliances that a business entity has to perform are as follows:

  • TAN number – Seller needs to have Tax Deduction and Collection Account Number (“TAN”). No need to obtain a new number if the seller entity has already obtained TAN for tax deduction at sources (TDS).
  • Collecting the tax – Tax to be collected at the time of receipt of sale consideration.
  • Deposit with Government- The tax collected during the month need to be deposited within seven days of next month. Please note that there is no exception or extended time for the deposit of tax collected in the month of March. (Challan no 281)
  • Filing of statement (Form no. 27EQ)- A quarterly statement of all the tax collected at source during the quarter needs to be submitted within 15 days from the close of quarter as mentioned in Table-1.
  • Issuance of certificate (Form no 27D)– Certificate for tax collection need to be issued to the buyer by seller. Due dates mentioned in Table -1.

Table -1

Quarter Ending on Due date of submission of return Due date for issuance of certificate of tax collected
30th June 15th July 30th July
30th September 15th October 30th Oct
31st December 15th January 30th Jan
31st March 15th May 30th May

Q. 21. What are the steps to be taken by business entities to get prepared for implementation of sec 206C(1H):

Ans. Some of the general steps to be taken by business entities to get ready for new compliances are as follows:

  • Firstly, the seller shall check whether the provisions are applicable on it. For this, key is the sales /gross receipts/turnover of immediately preceding financial year (i.e. sales of FY 2019-20 to be checked for applicability in FY 2020-21).
  • To identify the customers from whom receipts for consideration for sale of goods is more than ₹ 50 lacs during the year. For this, customers already breached the threshold or potential customer who may cross the threshold shall be identified.
  • The entity may insert a specific line item in invoice to charge TCS or it may charge TCS through debit note. Further, it has to be made sure that invoice or debit note format remains GST compliant.
  • The buyer shall be intimated in advance regarding levy of TCS provisions and obligation on him to pay for TCS.
  • Open a separate ledger account in books of account, to account for the TCS receivable from customer and TCS payable to Govt. A separate ledger account will help in reporting and reconciliation.
  • Setup the check list and procedure for compliance such as deposit of TCS, filing of statement and issuance of certificate to buyer.

(Republished with Amendments)

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79 Comments

  1. Prasanta Chakraborty says:

    We are running a co-operative store catering to individuals . Our turnover is a little more than 10 crores. None of our suppliers have supplied more than 50 lacs in the current year. Do we fall under TCS regime?

    1. Cadineshsinghal1 says:

      Your Suppliers would charge TCS from you if their receipts from you is more than 50 Lacs in a financial year.

      You would only be required to charge from your customers if the collection against sales is more than 50 Lacs otherwise it would not be applicable

    1. Cadineshsinghal1 says:

      As per the clarification received, TCS need to be paid on sales consideration collected from buyer and no adjustment for GST or other indirect taxes to be done from the same.

  2. NEHA says:

    Sir can you pls tell me i the turnover is more than 50lacs and i forget to add TCS on invoice at the time of billing and e way bill has been already generated and we realize the mistake now what can we do???????

  3. Sajeev says:

    Our company turnover for 2019-2020 is more than 10 crores. Hence we are liable to collect TCS from receipts of suppliers above 50 lakh from 01.10.2020.
    1. Is it mandatory to show TCS in our GST bills.
    2. If TCS is shown in our invoice, then TCS payable ledger will be created automatically in software.
    3. At month end, total TCS payable amount appears in our ledger.
    4. Suppose A is our debtor, who maintains a running debit account. During October, as per TCS ledger, we collected Rs.5000 from his GST bills towards TCS. Suppose payments received from him for October Sales attracts Rs.6000 TCS, please clarify the amount of TCS payable.
    5. In IT notifications, it is clear that TCS is applicable from receipts. In such cases, how can we track TCS invoices between 2 financial years.
    Advocate Sajeev

    1. Cadineshsinghal1 says:

      Sir, liability to discharge TCS is based on collection made and thus irrespective of the year of invoicing, TCS to be paid based on the collection made. It is not mandatory to charge TCS on invoice and you can also recover it from buyer through debit note

  4. Ramesh says:

    Sir,
    Is there any per transaction limit for applicability of TCS ?
    We sell products ranging from Rs.400 to Rs.1lakh.
    There will be large no of small value transactions to bank branches. Billing to individual private/scheduled bank branches across India.
    Compliance will be very difficult for us. These branches may not pay TCS if included in the invoice as per branch billing will be very small. We cant reach out accounts department to recover the TCS amount as we can only talk at branch levels.
    Ultimately we end up paying TCS amount from our margins
    please suggest way out, how we can simplify compliance

  5. Krishna says:

    Sir, Iam working in Vijayawada as a Sr. Accountant, from Govt. contractor & retail selling of Stationary. 2019-20 total turnover 10.20crore, and this year i.e.2020-21 up to september’2020 total turnover 1.20crore. If we collect TCS from retail customer also which purchases below 1 lakh. And we collect TCS from state & central Govt. supplies???
    I requesting you Please clarify the said.

    1. Cadineshsinghal1 says:

      TCS would be applicable only if the receipts/ collection against sales to a customer is more than 50 Lacs in a financial year otherwise not.
      Supplies to Central and State Governments are exempted and thus no TCS to be deposited on supplies to Central & state govt.

  6. Krishnamoorthy Naidu says:

    Q. 14. Whether TCS shall be collected by the seller where the buyer is also obliged to deduct TDS on payments being made?
    NOT Clear
    obliged to deduct TDS on payments being made?

    1. Cadineshsinghal1 says:

      in case TDS is deductible on a transaction, than there is no requirement to collect TCS. It has been specifically excluded from purview of TCS on sale of goods

  7. Amit says:

    Sir
    The applicability of the term TCS to be collected if the Value/Aggregate Valuereceived for Goods from a buyer is more than ₹ 50 Lakhs in a financial year;is to PAN Or TAN .
    means seller has many contract with comapny but the value of each contarct is less than 50 lakhs .but
    whether TCS is applicable

    1. Cadineshsinghal1 says:

      No it would not be applicable on sales return. As clarified by CBDT, no adjustment is required to be made on account of sales return

  8. Anand says:

    Please tell me TCS on scrap is same as old @ 1% & for manufacturer Form 27C declaration form for non deduction of TCS is as it is or any change ?

    If a trader to trader scrap sale when TCS is 1% or 0.01%

  9. SUDHIR BHATIA says:

    IN october month i sold for Rs. 75 lakh to “A” and purchased for Rs. 70 lakh from “A”. Now “A” paid me the balance Rs. 5 lakh. Please explain the position of TCS.

    1. Cadineshsinghal1 says:

      Sale of 75 Lacs and purchase of 70 Lacs are two independent transactions. If the amount is adjusted and net payment is received, even than in our view TCS should be deposited on the gross sales amount

  10. Gopal says:

    Sir
    If this TCS is on collection then if no sale is made to a buyer during 2020.21 but we receive Rs 80 lakh from him between 1.10.20 to 31.3.20 for previous year we have ro collect TCS.
    Same way if we sale to a buyer during 1.10.20 to 31.3.21 Rs. 1.20 crore and receive same in three years Rs 40 lakh each year no TCS is required to be collected. Pls clarify.

    1. Cadineshsinghal1 says:

      Yes you are right. CBDT in its clarificatory circular has re-emphasized that TCS shall be chargeable on the collection of sales consideration and if consideration is split in 3 years and each year is less than 50 Lacs, than no TCS shall be payable

  11. CA RAJU R says:

    a person is doing exclusively fish purchase and selling business. amount received from sale of fishes before 30.09.2020 of rs.2 crores and receivable after 01.10.2020 of rs.3 crores. my queries.
    01. whether sale of fishes exempt from payment of gst
    02.if exempt from payment of gst, whether can he take gst regn and to fish sales in gstr 3b under exempted turnover and not to pay gst

    03. in my case, tcs calculation on which amount.

  12. CA Sangita Tailor says:

    Sir,
    1.My client’s sale in FY 2019-2020 was 9 crore and GST was 1.62 crore, whether the provision is applicable in this case?
    2. IN FY 2020-2021, my client sold goods to Mr. A (Taxable value 50 lakhs+GST 9 lakhs), now in this case whether my client is required to collect TCS?

  13. Rajesh says:

    Sir,

    My company has sale and services. If i have 45 lacs sales and 10 lacs services to a customer whether it will cover threshold limit of 50 lacs

  14. Puneet Sharma says:

    Will this TCS be applicable if goods are purchased for personal consumption.

    Will this TCS be applicable if goods/machinery are purchased for production purpose.

    1. Cadineshsinghal1 says:

      If goods in a financial year exceeding Rs.50 Lacs are purchased, than TCS would apply whether it is for personal consumption or business

      There is no exclusion for goods being purchased for production/ manufacturing

    1. Cadineshsinghal1 says:

      TCS has to be deposited by 7th of following month of collection of sales consideration. Thus the recovery of TCS amount through debit note on quarterly basis is your commercial call, however tax liability has to be discharged on monthly basis on the payments received from customer

  15. devi says:

    Our company turnover does not exceed 10 crores in previous financial year and current financial year.
    But we sale goods to some of our customer more than 50 lakhs , is it applicable for us to deduct TCS?

  16. Shyama says:

    hi, what is the relevance of TAN and adhaar of customers here? is it mandatory to obtain TAN and Adhaar of customers from whom we are collecting TCS?

  17. Sahil says:

    On what value is TCS applicable, suppose receipt till 30th September is 55 lacs and, receipt post 1st October is 5 lacs.

    TCS = .075% on 5 lacs or 60 lacs.

    Pls clarify.

  18. Naveen Kumar says:

    Sir,
    Will Tcs be applicable on SEZ customers, as sale to SEZs are treated like as export and tcs is not applicable in case of import and export.

    1. Cadineshsinghal1 says:

      In my view, the provision exempts the transaction involving export of goods outside India only from the purview. Thus in case of sale of goods to SEZ, it would become applicable though ideally it should not Until a clarification is received.

    1. Cadineshsinghal1 says:

      TCS is to be paid on collection against sale of goods. Thus there would be no impact if goods are subsequently returned by customer, he can claim the credit of TCS

    1. Cadineshsinghal1 says:

      High Seas sales means sale of consignment by a buyer to a third party before arrival of goods but after sailing vessel from load port. In simple words, the ownership of goods is transferred when goods are on transit. Thus, a person selling goods as part of High Sea Sales, cannot be said to be an importer rather the person eventually filing the Bill of entry at the custom port for clearance shall be regarded as an importer. Section 206C(1H) exempts from its purview a buyer who imports goods into India. As such the person eventually filing the bill of entry shall be exempt.
      Thus in our view, the person selling the goods as High Seas Sales shall collect TCS from the person buying the goods.

      1. Rohit Kumar says:

        With Due respect sir,

        you are saying that importer is exempt from TCS u/s 206C(1H) and the buyer under high sea sale is treated as importer because he is paying the import duty on the same.

        Further you are saying high sea seller shall collect the TCS on high sea sale.
        Now my question is if the buyer is exempt from TCS then how seller can collect the TCS on same transaction?

        Please provide your valuable view.

    1. Cadineshsinghal1 says:

      Whether the sale of electricity/ power is sale of goods or services has not been categorically defined under the Income Tax Act, 1961. However, taking que from Indirect Tax Laws, Electricity is a good falling under Chapter/Heading/Sub-heading No. 2716 00 00 of Customs Tariff Act. A supply of electricity is exempted vide Notification No.2/17-CT(R) dated 28.6.17 as amended (serial no.104).
      Further, transmission or distribution of electricity by an electricity transmission or distribution utility is exempt vide Notification 12/2017-Central Tax (Rate), dated 28-6-2017 as amended at serial no. 25 classified under SAC 9969.
      Transmission or distribution of electricity (SAC 9969) by other than electricity transmission or distribution utility is taxable vide Notification No.11/17-CT(Rate) dated 28.6.17 as amended (at serial no.13 ) GST@ 18% ( CGST 9% & SGST 9%).
      Therefore, in the absence of any clarification under Income Tax Act regarding the classification of electricity as goods or services, the conclusion drawn from Indirect Tax Laws regarding the treatment of electricity/ power as sale of goods or services, can be reasonably applied.
      To conclude, it can be said that generation and distribution of electricity are two different things. Generation of electricity should be considered as supply of goods and transmission/distribution of electricity should be considered as supply of service.

    1. Cadineshsinghal1 says:

      It doesn’t matter whether buyer is an exporter or not. TCS is only a mechanism of collection of income tax by government. Any buyer whose TCS has been collected can claim the credit of same as his advance taxes paid at the time of filing of return of income. TCS provisions under Income Tax Act does not provide any mechanism of adjustment of TCS collected by a person (being a seller) against his TCS that has been collected (being a buyer).

    1. Cadineshsinghal1 says:

      This section 206C(1H) envisages that TCS shall be collected on sale of ‘Any Goods’. Thus, in the absence of any clarifications from CBDT regarding the meaning of goods and to be on the safer side, it can be reasonable presumed that TCS shall also be collected on sale of fixed assets as well.

  19. Cadineshsinghal1 says:

    No the new provisions would only apply to sale of goods not already covered in TCS provisions. Further the transactions on which TDS is deducted are also excluded

  20. Guruprasad says:

    Sir,

    Tcs on sale of Motor Vehicle More than Rs 10 lacs is included in the value of rs 50 lacs?
    If we collected@ 1% Tcs on sale of motor vehicles more than 10 lacs, again collect tcs @01%?

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