All about provision of section 206C(1H) of Income tax Act, 1961 – Tax Collection at Source for Traders

Government introduced new provision vide section 206C(1H) applicable from FY 2020-21, however due to pandemic the applicability of the provision deferred to 01.10.2020 i.e. the provision of said section will be effective from 01.10.2020.

Summary of Provision of section:

1. Collection of TCS @ 0.1% on receipts from eligible buyer;

2. Eligible Buyer – Receipts exceeds Rs. 50 Lakhs from said buyer during the FY 20-21 i.e. limit of Rs. 50 lakhs to be calculated from beginning of the year, however collection is required to be made w.e.f. 01.10.2020;

3. It is applicable on sale of goods only and not on services;

4. Not required to collect on export of goods;

5. In case PAN is not available then the applicable rate will be 1% instead of 0.1%.

Compliance to be done with effect from 01.10.2020:

It is altogether different activity and compliance to be done regularly, in case of non-compliance Interest, late fee as applicable to default of TDS will apply to TCS as well.

1. Collection of tax at source @ 0.1% on amount received against sell of goods from buyer;

2. Payment of the same with government on or before 7th of next month in which collection is made;

3. Filing of Quarterly TCS return on or before 15th day of next month following the end of the quarter;

Difference between TDS Compliance and TCS Compliance:

Though it is additional or rather new compliance, still there is difference between TDS and TCS in respect of the following:

1. In case of TDS, tax is required to be deducted on value excluding GST, whereas under TCS, collection is required to be made on invoice value (Relief granted vide Circular No. 01/2014 dated 13.01.2014 and as amended by Circular No. 23/2017 dated 19.07.2017 is only in respect of TDS and not for TCS);

2. Unlike TDS payment for the month of March, the due date for payment of TCS for the month March is 07th April instead of 30th

3. Unlike TDS Return for each quarter, the due date for filing TCS return is 15th of next month following the end of the quarter instead of 31st of next month in case of TDS.

Due Date Chart is as under:

Sr. No. Month/Quarter TCS Payment Due Date TCS Return Due Date
1 April 07 May
2 May 07 June
3 June 07 July 15 July
4 July 07 August
5 August 07 September
6 September 07 October 15 October
7 October 07 November
8 November 07 December
9 December 07 January 15 January
10 January 07 February
11 February 07 March
12 March 07 April 15 April

As of today, no further extension provided in respect of the same.


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October 2021