TCS Under Section 206C(1H)
Background: Section 206C of the Income-tax Act, 1961 (‘the Act’) provides for the collection of tax at source (‘TCS’) on stipulated kinds of goods. TCS is a procedure where payee collects an amount as TCS from the buyer in addition to amount of receipt of sale consideration and pays to the Government. Section 206C covers several transactions under TCS like sale of alcoholic liquor for human consumption, sale of scrap, sale of motor cars above a certain value, etc.
Provision covered u/s 206C(1H):
The relevant provisions of the section are reproduced as under:
“(1H) 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, other than the goods being exported out of India or goods covered in sub-section (1) or sub-section (1F) or sub-section (1G) shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 0.1 per cent of the sale consideration exceeding fifty lakh rupees as income-tax:
Provided that if the buyer has not provided the Permanent Account Number or the Aadhaar number to the seller, then the provisions of clause (ii) of sub-section (1) of section 206CC shall be read as if for the words “five per cent”, the words “one per cent” had been substituted:
Provided further that the provisions of this sub-section shall not apply, 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 suc amount.
Explanation — For the purposes of this sub-section —
(a) “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;
(b) “seller” means a person whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees 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.
1. Sale of any goods above Rs. 50 Lakhs
2. Turnover of Rs. 10 Crores and above during FY 2019-20 and onwards
3. Section is not applicable on export of Goods
4. TCS shall be collected on Receipt basis.
Rate of TCS:
|Buyer having PAN or Aadhar||Buyer not having PAN or Aadhar|
|TCS- Till 31.03.2021 @0.075%||TCS- Till 31.03.2021 @1%|
|TCS- After 31.03.2021 @0.1%||TCS- After 31.03.2021 @1%|
Example for Understanding the Provision:
Mr. A sells the goods to Mr. B:
|Date||Sale amount||Amount received||TCS @0.075%|
|15.09.2020||Rs. 60 Lakhs||Rs. 60Lakhs||–|
|10.10.2020||Rs. 50 Lakhs||Rs. 20 Lakhs||Rs. 1500|
|15.10.2020||–||Rs. 30 Lakhs||Rs. 2250|
1. Aggregate Value of total sales of Mr. A to Mr. B is Rs 1.10 Crores (60Lakhs + 50 lakhs), exceeding the Rs 50 lakhs in the FY 2020-21.
2. A will be liable to collect TCS on Rs. 50 lakhs @0.075% when he receives the sales consideration i.e. on 10.10.2020 and 15.10.2020.
3. If Mr. B does not provide his PAN or Aadhar to Mr. A, then the TCS will be collected @ 1 % of Rs. 50 lakhs.
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