Article on TCS On Sale Of Goods Under Section 206C(1H) Of The Income Tax Act, 1961 Applicable Form 01-10-2020 explaining To Whom Section 206C(1H) is applicable, From whom TCS shall be Collected, Whether Section 206C(1H) is applicable to the exporter, When collection shall be started from a particular buyer, Time of Collection of TCS, Whether collection of tax shall be made on such receipts made before 01-10-2020, Rate of TCS, Whether any registration is required to make compliance of such TCS, Which document should be issued to the buyer for collection of tax and TCS Return Details.
This section has become applicable with effect from 01-10-2020. Detailed concepts of this section is as under: –
| S. No. | Subject | Answer |
| 1 | To Whom this section is applicable? | Every person (other than Central Government), being a seller, whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees during the previous financial year. |
| 2 | From whom tax shall be Collected?
|
The tax shall be collected from a buyer from whom
1. Receipt of Consideration for sale of any goods of the value or 2. Aggregate of such value Exceeding Rupees Fifty Lakh in any previous year. Example 1. The buyer’s purchase from the seller A in the F.Y. 2018-19 was Rs.55 lakh F.Y. 2019-20 was Rs. 35 lakh This section shall be applicable for such buyer because sale exceeds Rs.50 lakh in any previous year i.e. in 2018-19 |
| 3 | Whether this section is applicable to the exporter? | Yes, this section is applicable to the exporter for sale of goods made within India. TCS shall not be applicable on goods export out of India.
Example 2. The exporter does sales within India and out of India. Therefore, if his (exporter) sales exceeds ten crore including sales made out of India then he shall be liable to collect TCS from the buyer of India if conditions as stated in para are fulfilled. |
| 4 | When collection shall be started from a particular buyer? | After receipt of sale consideration exceeding Rupees 50 lakh.
Example 3 Suppose receipt of sale consideration threshold limit 50 lakh complete on 01-10-2020. After such date TCS shall be collected on every receipt of consideration. |
| 5 | Time of Collection? | The collection of tax shall be made at the time of receipts of sale consideration. |
| 6 | This Section has become applicable from 01-10-2020.
Whether collection of tax shall be made on such receipts made before 01-10-2020? |
No
Clarification of the Ministry of Finance vide press release dated 30-09-20 – For example, a seller who has received Rs. 1 crore before 1st October, 2020 from a particular buyer and receives Rs. 5 lakh after 1st October, 2020 would be required to collect tax on Rs. 5 lakh only and not on Rs. 55 lakh [i.e Rs.1.05 crore – Rs. 50 lakh (threshold)] by including the amount received before 1st October, 2020 |
| 7 | Rate of TCS | It is 0.1 percent on receipt of sale consideration. But till 31-03-2021 this rate shall be 0.75 percent.
If rupees 10 lakh is received, TCS shall be deducted as Rs.7500.00 at the rate of 0.75 percent on 10 lakh. |
| 8 | Whether any registration is required to make compliance of such TCS? | If the person is already registered for TDS and having TAN under the Income Tax Act then he shall have no requirement of additional registration. |
| 9 | How the Work should be done on this provision? | 1. Check yourselves whether your turnover had exceeded ten crores in previous year 2019-20.
2. If turnover exceeding 10 crores, check yourselves whether you have TAN under the Income Tax Act. If it is not available with you then get registered yourselves for TAN under the Income Tax Act. 3. Scrutinize your buyers to whom you have sold out goods or received payment exceeding 50 lakhs in any previous year. 4. After prepare such list of buyers check payment received from them from 01-04-2020 till date. 5. If payment received from any buyer exceeding 50 lakhs then start collection of tax from him on payment received on or after 01-10-2020. |
| 10 | Which document should be issued to the buyer for collection of tax? | Debit Note should be issued with full particulars on which payment. tax had been collected. |
| 11 | TCS Return Details | 1. Total collection in a month shall be deposited by 7th of the succeeding month.
2. TCS return shall be submitted quarterly 3. TCS certificates shall also be issued quarterly. |
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