Introduction to Section:

-Section 206C of the Income Tax Act provides for the collection of Tax at Source (TCS).

TCS is collect on specified goods like Alcoholic Liquor for human consumption, tendu leaves, scrap etc.

-In order to widen and deepen the tax, a two new sub-section (1H) is inserted with effect from 1.10.2020.

Who has to collect TCS:

  • Under section 206C(1H) seller is liable to collect tax at source from buyer.
  • “Seller” for this purpose means whose turnover exceeds Rs 10 crore during the financial year immediately preceding the financial year in which the sale of sale of goods is carried out.
  • “Buyer” means a person who purchase any goods (i.e. any other goods not covered by other provisions of section 206C) from seller and value or aggregate value of goods during previous year exceeds Rs 50 lakh.

When to collect TCS:

  • Seller receives any amount as consideration for sale of any goods of the value exceeding Rs 50 lakh from any single buyer.
  • TCS has to be collected at the time of received of such amount i.e. on RECEIPT BASIS.
  • Sale made to buyers upto 30th September, 2020 shall not be liable to collect the TCS.

Non Applicability of the section:

  • Where the turnover of the seller is less than 10crore in the preceding Financial Year.
  • Where goods are exported out of India.
  • Where any TDS provision is applicable to such goods.
  • Where the buyer is the Central Government, State Government, Embassy, A high Commission, Legation or trade representation of foreign state.
  • Where the buyer is a local authority as per explanation to section 10(20).
  • Where the seller is dealing with the following goods:
Particulars Section of TCS
-Alcoholic Liquor for human consumption

-Tendu Leaves

-Timber obtained under forest lease

-Timber obtained by any mode other than under a forest lease

-Any other forest produce not being timber or tendu leaves

-Scrap

-Minrals, being coal or lignite or iron ore

Section 206C(1)
Motor Vehicle (if the value exceeds 10laks) Section 206C(1F)
-Sum of money (above 7 lakhs) for remittance out of India

-Seller of an overseas tour program package

 

 

Section 206C(1G)

Rate of TCS:

  • TCS shall be collected @0.1% of the amount in excess of Rs 50 lakh.
  • If buyer does not provide the PAN , TCS shall be deducted @1%.
  • NOTE: (TCS rate has been reduced to 0.075% from 1st October, 2020 to 31st March 2021).

Due date to deposit TCS:

  • The TCS collected by the seller shall be paid to the account of the Government by the 7th of the next month.

Illustrations:

Sr No.
Seller
FY 2019-20
FY 2020-21
Buyer
Sell till 30th Sept
Sell From 1st Oct
TCS    u/s 206C(1H)
Remarks
1
A
11cr
8cr
B
23,00,000
68,00,000
4100
0.075% on 41 lakh (Being excess of Rs 50 lakh)
2
A
8.5cr
12cr
B
23,00,000
68,00,000
NA
As turnover in the FY 2019-20 not exceeding Rs 10 crore.
3
A
13cr
16cr
B
76,00,000
7,00,000
700
On Rs 7 lakh being turnover after 30th September
4
A
11cr
8cr
Central Government
53,00,000
25,00,000
NA
Since section 206C (1H) is not applicable if buyer is Central Govt.
5
A(Job worker)
14cr
12cr
B (is liable to deduct TDS u/s 194C)
35,00,000
55,00,000
NA
Since TDS is already deducted on this transaction.
6
A (Auto Dealer)
20cr
15cr
B (Buying a Car)
0
25,00,000
NA
As on this transactions TCS shall be collect u/s 206C(1F)
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21 Comments

  1. Debabrata Roy says:

    Is tcs to be applied on jnvoice? Or tcs to be tracked from debtors collection? Is tcs to be calculated on 50 lacs sales with gst or basic value?

  2. Akash Enterprises says:

    Dear Sir,
    Please clear me that we can dedcut tcs to our customer who is not resale our yarn but he is manufacturing fabric from our yarn.Our turn over Rs.30 crore in f.y 2019-20 and we have business our customer above Rs.50 Lakh in 2019-20

  3. KALPANA says:

    We Have Deemed Export sales (i.e Sale to EOU unit against form A). As per my understanding, there is no need to deduct TCS u/s 206C(1H) am i right or wrong.

  4. C. Arthanareeswaran says:

    Sir, how is it possible to collect TCS when the payment is received. I think that the section 206 C (1H) should be altered in such a way that when the sale value exceeds 50 lakhs to a buyer, TCS is to be collected from the buyer by adding it in the invoice itself. Kindly give your opinion.

    1. Jinalee says:

      Yesterday clarification for the same has been given in the press release .. According to my opinion it seems bit difficult to collect on receipt basis..

  5. C. Arthanareeswaran says:

    Sir, how is it possible to collect TCS when the payment is received? I think that the section 206 C (1H) should be altered in such a way that when the sale value exceeds 50 lakhs to a buyer, TCS is to be collected. Please reply.

  6. bindu says:

    Dear Sir, Illustration 1 & 3 is totally confusing. 1st the sales value before Oct is considered for TCS calculation, but in the 3rd illustration sales value before Oct is not considered. Please clarify.

    1. PARAG JAIN says:

      I have same query.Remark against illustration 1 & 3 is totally confusing. In 1st illustration, the sales value before Oct is considered for TCS calculation, but in the 3rd illustration sales value before Oct is not considered. Please clarify.

      1. MOHAN says:

        Please study above illustration once again as per above section TCS aplicable on which amount collected after 1st october 2020 only that also when it will be exceeds to 50 lakhs

    2. MOHAN says:

      Please study above illustration once again as per above section TCS aplicable on which amount collected after 1st october 2020 only that also when it will be exceeds to 50 lakhs

    3. GURPREET SINGH says:

      1ST ILLUSTRATION TO BE CORRECT:

      TCS IS APPLICABLE ON SALE CONSIDERATION AFTER 01.10.2020 I.E. 68 LAKH – 50 LAKH = 18 LAKH @ 0.075% = RS. 1350/-

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