TCS Scope Widening
1 October 2020
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.
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:
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
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