TCS on Sale of Goods Section 206C(1H) – Income Tax Act, 1961

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.

Applicability:

• whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees (>10 Crores) 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.

i.e During the previous financial year Turnover > 10 Crores then Sec 206C(1H) is applicable for current year.

• 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.

Time of Deduction: at the time of receipt of such amount, collect from the buyer.

Rate of Tax (TCS): a sum equal to 0.1 per cent of the sale consideration exceeding fifty lakh rupees as income-tax.

if the buyer has not provided the Permanent Account Number or the Aadhaar number to the seller, then rate of tax is one per cent (1%)

Not Applicable To:

(i) goods being exported out of India or

(ii) goods covered in sub-section (1) or sub-section (1F) or sub-section (1G)

• Alcoholic Liquor for human consumption
• Tendu Leaves
• Timber or any other forest products
• Scrap
• Minerals, being coal or lignite or iron ore
• Parking Lot, Toll Plaza, Mining and quarrying
• sale of a motor vehicle of the value exceeding ten lakh rupees (>10Lacs)
• foreign remittances under Liberalized Remittance Scheme (LRS), sale of overseas tour packages

(iii) 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.

(iv) “Buyer” means a person who purchases any goods, but does not include,

(A) the Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or

(B) a local authority as defined in the Explanation to clause (20) of section 10; or

(C) 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;

TCS Payment and Return

• TCS collected need to be paid within 7 days of the next month.
• Quarterly Statement: Due date to file the TCS return and issue certificate