With a view to widen the tax-net the India Government has widened the scope of TCS (Tax Collected at Source) provided under section 206C of the Income Tax Act, 1961. As per the extended scope, tax is need to be collected on foreign remittances under Liberalized Remittance Scheme (LRS) , sale of overseas tour packages and on sale of goods by specified seller (after exceeding a specified limit). Such all the scopes are applicable from 01.10.2020.
The Finance Act, 2020 has introduced the new section 206C(1H) of the Income Tax Act, 1961 for Tax Collected at Source on sale of goods. The said provisions are applicable from 01.10.2020.In this article I will discuss a brief preview of the scope of TCS on Sale of goods by specified seller.
Sec- 206(1H) –Applicable from 01.10.2020 – Applicable to whom –
1) Applicable on sale of all goods except the export of goods and goods already covered under other provisions of TCS. i.e.
2) TCS provisions are applicable if the value or aggregate value of sales consideration > Rs.50 Lacs during the year.
3) TCS is applicable to the amount received in excess of Rs. 50 lacs.
4) TCS provisions are applicable at the time of receipt of consideration.
Suppose, M/s XYZ Ltd. has turnover of Rs 20 crores in FY 2019-20 and has made sale of goods to Mr A of Rs 70 Lakhs in FY 2020-21 and receives Rs 56 lakhs as payment on 31.03.2021.
M/s XYZ Ltd needs to collect TCS on Rs 6 lakhs i.e. Rs (56-50) lakhs* 0.1%. Rs 600 needs to be collected as TCS, issue certificate to the buyer and file statement of such tax collected.
(But as TCS reduced till 31.03.2021 by 25%, in this case tax needs to be collected is Rs. 450 (i.e. (56-50) lakhs * 0.075%)
Continuing with the above example, if the balance of Rs 14 lakhs (Rs 70-56 lakhs) is received during the next financial year, say 10.04.2021-
M/s XYZ Ltd needs to collect TCS on Rs 14 lakhs at 0.1%. i.e. Rs 1400 needs to be collected as TCS, issue certificate to the buyer and file statement of such tax collected.
Rate of TCS
Exclusion of Buyers
Section 206(1H) is not applicable to the following buyers:
TCS Payment and Return
|Quarter||Quarterly Return- Due Date||TCS Certificate|
|Apr-June||15 July||30 July|
|July- Sep||15 Oct||30 October|
|Oct- Dec||15 January||30 January|
|Jan- Mar||15 May||30 May|