Section 206C of the Income Tax Act, 1961 (Act) deals with the collection of tax at source (TCS) on various goods mentioned under various sub sections as amended from time to time. TCS is the amount of tax which is to be collected by the seller from the buyer on sale of goods as covered under the respective provisions of the Act.
Further, a new sub section has been introduced to Section 206C of the Act vide The Finance Act, 2020. It has been made applicable from October 1st, 2020.
The provisions of the sub section (1H) of Section 206C are as under:
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,––
(a) “buyer” means a person who purchases any goods, but does not include,––
i.the Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or
ii. a local authority as defined in the Explanation to clause (20) of section 10; or
iii. 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.
Further, Circular No. 17 of 2020 dated September 29th, 2020 and a press release dated September 30th, 2020 have been issued clarifying the applicable provisions of this sub section.