TCS Scope Widening

Eligibility

  • Sale of any goods above Rs. 50 lakhs; and
  • Turnover of Rs. 10 Crores and above during FY 2019-20 and onwards

Effective from

1 October 2020

Exceptions

  • If the buyer is liable to deduct TDS or collect TCS under any other provision of the Act and has deducted/collected such amount on the goods purchased by him from the seller; or
  • If the buyer is the Central/State Govt, an embassy, a High Commission, legation, consulate, the trade representation of foreign state, local authority; or
  • Any Person importing goods to India or any class of person notified by the Central Govt in the official gazette for the purpose subject to such condition as specified in that notification

Detailed Description

Every seller, whose total sales, gross receipts  or turnover from the business carried on by him exceed ₹ 10 Crores during the FY 2019-20 & onwards, who receives any amount  as consideration for sale of any goods (excluding exports) of the value or aggregate of such value exceeding ₹ 50 Lakhs in any previous year shall at the time of receipt of such amount collect a sum equal to 0.1% of the sale consideration exceeding 50 Lakhs as Tax Collected at Source (TCS) from the buyer. If the buyer has not provided the Permanent Account Number or the Aadhaar number to the seller, then the applicable rate of TCS will be 1 PERCENT.

All the other compliances like payment, filing of form/return, and issuing of certificate remains the same. In case of Non-compliance, there still exist the assessee in default provision.

Key Takeaways

The said provision is applicable to all transactions including i.e. Inter-company sales transaction exceeding Rs. 50 Lakhs in the FY 2020-21. But seller will be liable to collect TCS w.e.f. 1st October, 2020. The assessee needs to check the applicability on year on year as well as specific to each buyer basis on PAN India not GSTIN Basis

There has been no corresponding amendment into the provision of TCS for making an application for collection of tax at such lower rate than the relevant rate specified in section. The only section covered by the for making an application for collection of tax at such lower rate than the relevant rate specified in sub-section pertains to scrap sales, Alcoholic Liquor for human consumption, Tendu leaves, license for parking lot, toll plaza, Mining & quarrying etc.

The exemption from collecting tax is given only to those buyers who are liable to deduct tax at source under any other provision of this Act and has deducted such amount. The buyer will get the tax-credit of tax collected at source by the seller

 The goods mentioned below are not required to consider for the above said provision since the rate for collecting tax for such goods has been specifically mentioned:

  • Alcoholic Liquor for human consumption
  • Tenduleaves
  • Timber obtained under a forest lease
  • Timber obtained by any mode other than under a forest lease
  • Any other forest produce not being timber or tendu leaves
  • Scrap, Minerals, being coal or lignite or iron ore
  • Motor vehicle
  • Foreign remittance through Liberalised Remittance Scheme
  • Selling of overseas tour package

Illustration

Context

Mr. A is the seller and Mr. B is the buyer. They conduct business on regular basis. Mr. A gross receipts or turnover from the business carried on by him exceeds ten crore rupees during FY 2019-20.

Transaction 1: Sold and Received prior to 1 Oct 2020 Transaction 1

No TCS will be collected by seller as the said provision is applicable from 1st October, 2020

Transaction 2: Sold and Received after 1 Oct 2020

Transaction 2

  • Aggregate value of total sales of Mr. A to Mr. B is ₹1.35 Crores (70 lakhs + 65 lakhs), exceeding the ₹50 lakhs in the FY 2020-21
  • Mr. A will be liable to collect TCS on ₹60 lakhs @ 0.1% when Mr. A receives the sales consideration i.e. on 25 October 2020
  • If Mr. B does not provide his Permanent Account Number or Aadhaar number to the seller, then the applicable rate of TCS will be collected @ 1% of ₹60 lakhs

Author Bio

Qualification: CA in Practice
Company: Surana Maloo & Co. (SMC)
Location: Ahmedabad, Gujarat, IN
Member Since: 07 Nov 2019 | Total Posts: 3
Nidhi Surana Jain, Daughter of Founder partner of the firm, Mr. Vidhan Surana is the second-generation professional committed to the continuing her father's Legacy. A fellow member of ICAI since August 2013, she started her career as Assistant Litigator with one of the reputed Advocate in Ahmedabad, View Full Profile

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28 Comments

  1. precihole says:

    our suppliers turnover is above 500 crores. his first transaction with us is of 30 lakhs only but he says due to his turnover he has to collect tcs from 1st bill is it true

  2. S. Sampath says:

    We have purchased Raw material from supplier for Rs. 66,75,003.00 on 05.10.2020 the break up as given below

    Taxable Value Rs. 58,00,000.00
    IGST @ 18% Rs. 8,70,000.00
    ——————–
    Rs.66,70,000.00
    TCS @ 0.075% 5,002.00
    ———————–
    Invoice Value Rs.66,75,003.00
    ————————
    Book of Entry
    Purchase A/c Rs. 58,00,000.00
    Taxes & Duties
    (Input IGST) Rs. 8,70,000.00

    Now what entry I will book for TCS Rs. 5,002.00

    Please Suggest

    1. GANESH says:

      Entry for your transaction :
      Purchase a/c………Dr 58,00,000
      ITC (igst) a/c………Dr 8,70,000
      TCS Receivable….Dr 5,002
      To, Party a/c 66,75,002

  3. goldi kesharwani says:

    dear sir
    if receipt (against sales) before 1st oct 20 is 70 lakh , after 1st oct receipt (against sales) is 80 lakh , so on which amount tcs is collectable ??

    1. RAJ PAL AGARWAL says:

      If my sale is below Rs.10 crores in the previous year
      then am I liable to collect TCS from my customers even after sales limit of Rs.50 lacs ?

  4. VIKAS DEORUKHKAR says:

    Question 1) If the goods are sold before October 2020 but the consideration is received in December 2020 – TCS will be deducted ?

    Question 2) Goods are sold in the month of Feb. 2021 and the payment received on May 2021, TCS will be deducted in which F.Y. ?

  5. MANAV GOEL says:

    1) SALE AMOUNT : – Rs. 60 Lacs
    CONSIDERATION RECD. : – Rs 40 Lacs
    TSC DEDUCTABLE?

    2) ADVANCE RECD. : – Rs. 60 Lacs
    SALE DURING THE YEAR : – 40 Lacs
    TSC DEDUCTABLE?

    3) SALE : – Rs 60 Lacs
    AMT RECD BEFORE OCTOBER : – Rs 40 Lacs
    AMT RECD AFTER OCTOBER : – Rs 20 Lacs
    AMT OF TCS @0.1% ON 20L OR 60L ?

    4) SALE : – Rs. 75 Lacs
    AMT RECD IN CURRENT YEAR : – Rs 45 Lacs
    AMT RECD IN NEXT YEAR : – Rs 30 Lacs
    TSC DEDUCTABLE?

    5) CURRENT YEAR SALE : – Rs 30 Lacs
    PREVIOUS YEAR B/F BALANCE : – 30 Lacs
    AMT RECD 30 Lacs FOR PREVIOUS YEAR
    AMT RECD 30 Lacs FOR CURRENT YEAR
    TSC DEDUCTABLE?

  6. Dhananjay Gajanan Kondhare says:

    Respected Madam,
    can mention/ provide the source for applicability date as 01/10/2020 and not 01/04/2020.
    Thank you in advance.

  7. SURYACHANDRA PAPER MILLS LTD // MAREDUBAKA says:

    Dear Sir,

    As per IT the sales TCS applicable 01/10/2020 what above before 01/10/2020 supplies???

  8. Tirth says:

    In section 206C of income tax in which the turnover for to collecting tcs was rs 10 crore is rs 10 crore inclusive of gst and other taxes or exclusive from some taxes
    And rs 50 lakhs from party is also inclusive of gst and other taxes or exclusive from some taxes.

  9. Shilpa says:

    i want to ask that our firm is partnership firm and we deducted tcs all scrap bill our turnover is 4 crores somethings so pls tell me is this right to go deducted tcs ?

  10. MANISH KANKANI says:

    according to act, it is mentioned that more than 50 lakh rs. we have to deducted TCS, as per the above example consideration is received 60 lakh out of which 50 lakh is limit, so on balance 10 lakh TCS is required to be deducted

  11. PUNEET JAIN says:

    DEAR SIR,
    LAST DATE OF FILING GSTR3B OF TURNOVER ABOVE 5 CRORE.
    & WHAT ABOUT BELOW 1.5 CRORE.
    DUE DATE AS PER GOVT.
    NO INTEREST, PENALTY & LATE FINE MUST BE CHARGED SO THAT.

  12. CA Sachet Agarwal says:

    Question 1) If the goods are sold before October 2020 but the consideration is received after October 2020. So whether TCS will be have to deducted ?

    Question 2) For eg If the Goods are sold in the month of March 2021 and the payment is received in the next year, what will be the procedure ?

    1. Gopal singh Charan says:

      Question 1) If the goods are sold before October 2020 but the consideration is received after October 2020. So whether TCS will be have to deducted ?

  13. Himanshu goel says:

    I want to ask one question that our firm is prop firm and he deals in construction business, accepting contract of Bses and mes. so whether it is covered in this section or exempt from this section

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