TCS on sale of goods will be applicable with effect from 1st October 2020. TCS applicability, rates and compliance are analysed below for your reference:

Applicability

  • Seller of goods are required to collect of TCS on the sale of goods exceeding Rs. 50 Lakhs with in India.
  • Turnover of the seller during preceding financial year shall be greater than Rs. 10 crore or expected to be greater than Rs 10 crores respectively.
  • Consideration received from the buyer (in one transaction or aggregate) shall be greater than Rs. 50 lakhs.
  • If the buyer is liable to deduct tax at source (TDS) under any other provision of this ACT on the goods purchased by him from the seller and has deducted such amount.
  • This shall not be applicable in case the buyer is Importer  Or transaction is an export.
  • Sale of scrap will continue to be collected @ 0.75% and @ 1% if buyer does not have PAN as per existing provision.

Applicable Rates

TCS rates on Sale of goods

Rates Applicability
0.075% From period 01.10.2020 to 31.03.2021
0.10% From 31.03.2021 onwards
1.00% If buyer does not have PAN

Sale of Scrap

Sale of scrap will continue to be collected @ 0.75% and @ 1% if buyer does not have PAN.

Compliance requirement

Seller of goods

  • Seller of goods should make necessary changes in the invoice/receipt vouchers to facilitate the TCS collection.
  • Seller of goods will deposit TCS to Govt on the sale proceed received from buyer by 7th of the following month for each month. File TCS statement/return and issue TCS certificate as per due date tabulated below:
Quarter ended Quarterly statement TCS certificate
30-Jun 15-Jul 30-Jul
30-Sep 15-Oct 30-Oct
31-Dec 15-Jan 30-Jan
31-Mar 15-May 30-May

Buyer of goods

Buyer of goods will account TCS receivable in book of accounts and claim TCS return in the annual return of income under Income Tax Act. Also can be utilised for advance tax liability computation and payment under income Tax Act.

Issues/Clarification

There are open practical issue in implementation of aforesaid TCS on sale of goods which required to be clarified by Income Tax authority. Open issues pointed below:

  • Whether TCS is to be applied on total invoice value including or excluding GST.
  • The impact on TCS on partial recovery of invoice, i.e. whether TCS will be assumed to be included in the part amount received against any invoices.
  • Whether TCS will also apply on sales made on or before 30 September 2020, although sales consideration has been received on or after 1 October 2020 etc.
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