TCS collected at Source (TCS) – Presentation

TAX COLLECTED AT SOURCE (TCS)

MEANING

-Every seller shall collect tax from the buyer of any specified goods at the time of receiving the payment or debiting the buyer account whichever is earlier

-Section 206C of the Income Tax Act governs the goods on which the seller has to collect tax from the purchaser.

CLASSIFICATION OF SELLER AND BUYER FOR TCS

Specific people or organizations who have been classified as seller for TCS:

> Central Government

> State Government

> Local Authority

> Statutory Corporation

> Company registered under companies act

> Partnership Firm

> Co-operative Societies

> Individual or HUF liable for tax audit under income tax act for a particular financial year

Similarly, Buyer for specified goods other than motor car means a person who obtains in any sale by way of auction, tender or any other mode specified goods or right to receive any such goods but does not include:

> Public sector company

> Central government

> State government

> Embassy of high commission

> Consulate and other Trade representation of a foreign nation

> Clubs such as sports club and social clubs

> A buyer in the retail sale of such goods purchased by him for personal consumption

GOODS	RATE	SECTION
Alcoholic Liquor for Human Consumption	1%
Tendu Leaves	5%
Timber wood under a forest leased	2.5%
Timber wood by any other mode than forest leased	2.5%
A forest produce other than Tendu leaves and timber	2.5%
Scrap	1%
Minerals like lignite, coal and iron ore	1%
Parking lot, Toll Plaza, Mining and Quarrying	2%	206C(1C)
Purchase of Motor Vehicle exceeding Rs. 10 Lakhs	1%	206C(1F)
Sum of money above Rs. 7 lakhs for remittance out of India	1%	206C(1G)
Seller of an overseas tour program package	5%	206C(1G)

Note:

TCS need to be collected only when these specified goods are utilized for trading purposes.

TCS on Sale of Goods With Effect from 01.10.2020 under Section 206C(1H)

In order to widen the scope of tax, a new sub section 206C(1H) is inserted with effect from 01.10.2020
Section is applicable only in case of seller whose total sales, gross receipts or turnover from the business carried on by him exceeds Rs. 10 crores during the financial year immediately preceding the financial year in which the sale is carried out.
TCS is required to be collected from the buyer whose aggregate purchases exceeds Rs. 50 lakhs in any previous year
TCS on first 50 lacs is not required to be collected.

Let us understand through example:

Seller	Aggregate Turnover during immediately preceding year	Buyer	Aggregate receipt against sales of goods during current year	Amount of TCS to be collected
A	5 Crores	B	80 Lacs	TCS not applicable as Mr. A does not fall in the definition of seller
A	5 Crores	B	40Lacs	TCS not applicable as Mr. A does not fall in the definition of seller and also aggregate receipt during the year does not exceed Rs. 50 lacs
A	15 Crores	B	80 Lacs	TCS applicable, Rs. 3000 (0.1% of Rs. 30 lacs)
A	15 Crores	B	40 Lacs	TCS not applicable as aggregate receipt during the year does not exceed Rs. 50 lacs