Article explains TCS related provisions under Section 206C(1H) of Income Tax Act, 1961 Effective from 1st October 2020. It explains Transaction on which TCS under Section 206C(1H) of Income Tax Act, 1961 is aopplicable, Rate of TCS, Rate if PAN No. is not provided, Due date of payment of TCS etc.
| XXXX as Buyer | |||||
| Effective from 1st October 2020 | |||||
| Particulars | Impact | Rate | Remarks | ||
| PAN | No PAN | ||||
| Whether Turnover of the Seller exceeds Rs 10 Crores in F.Y. ended 31.3.2020 | Yes | TCS is applicable on payment exceeding 50 Lakhs after 1.10.2020 | 0.075% | 1% | CA Certificate of the Seller for turnover as per Appendix -1 |
| Whether sale of Goods exceeds 50 lakhs in the current year | Yes | TCS is applicable on payment exceeding 50 Lakhs after 1.10.2020 | |||
| Sales exceeds Rs 50 lakhs in current year but turnover is less than Rs 10 crores in Previous Year | No TCS is applicable | ||||
| Sales is less than Rs 50 lakhs in current year but turnover exceeds Rs 10 crores in Previous Year | For payments above Rs 50 lakhs TCS is applicable | ||||
| Whether TDS or TCS is deducted by the Seller under any other provisions | Yes | No TCS is applicable | |||
| Whether the Buyer is a Central /State Govt, Embassy, Local Authority | Yes | No TCS is applicable | |||
| Whether the goods are imported into India | Yes | No TCS is applicable | |||
| Whether InterCompany Sales transaction are also covered | Yes | TCS is applicable on payment exceeding 50 Lakhs | |||
| Goods sold prior to 1st October 2020 exceeding Rs 50 lakhs | Yes | No TCS is applicable | |||
| Goods sold prior to 1st October 2020 exceeding Rs 50 lakhs and payment made after 1st October 2020 | Yes | TCS is applicable on payment exceeding 50 Lakhs | |||
–
| XXXX as Seller | ||||
| Particulars | Impact | Rate | Remarks | |
| PAN | No PAN | |||
| XXXX’s turnover is exceeding Rs 10 crores, hence provisions of TCS are applicable to us. | ||||
| Our Sales can be classified as : | ||||
| 1. Sales wherein TDS is deducted from the billing under other Provisions of Income Tax | 1. Since most of our Clients are deducting TDS under 194 C from our Bills, we will have to obtain declaration from the Clients and no TCS will be deducted. | |||
| Other Exclusions are : | 2. The Central or State government | |||
| 3. An Embassy, a High Commission, legation, commission, consulate or trade representative of a foreign State and a club | ||||
| 4. Local authority [as defined in explanation to section 10(20)] | ||||
| 5. A person importing goods into India or any other person as may be notified. | ||||
| 2. For all other Sales made by us where no TDS is to be deducted by the Clients, like RMC, aggregates etc | TCS is applicable on payment exceeding 50 Lakhs after 1.10.2020 | 0.075% | 1% | |
For better understanding let us take a look at the various scenarios:
| Sr. No. | Seller | Ye-ar 19-20 | Ye-ar 20-21 | Buyer | Selling till 30th Sep | from 1st October | TCS u/s 20-6C(1H) | Remarks |
| 1 | XYZ | 12 Cr | 9 Cr | XXXX | 2400000 | 6500000 | 2,925 | 0.075% on 39 Lac (Being Excess of Rs. 50 Lac) |
| 2 | ABC | 9 Cr | 12 Cr | XXXX | 2400000 | 6500000 | NA | As Turnover in the FY 2019-20 not exceeding Rs. 10 Crore |
| 3 | DDD | 12 Cr | 18 Cr | ABC | 8500000 | 600000 | 450 | on Rs. 6 Lac being Turnover after 30th September |
| 4 | AIPL | 12 Cr | 18 Cr | Local Authority (Municipal Corporation of Mumbai) | 5500000 | 2000000 | NA | As this Clause not applicable if buyer is Local Authority |
| 5 | AIPL | 15 Cr | 12 Cr | XYZ (Who is Liable to deduct TDS on the Value of Job Work | 3000000 | 3500000 | NA | As this transaction is already covered by TDS |
| 6 | XYZ (Auto Dealer) | 20 Cr | 15 Cr | XXXX (Buy A Car) | 0 | 1500000 | NA | As on this transaction TCS shall be Collect u/s 206C(1F) |
Due dates :
The dates for paying TCS to the government are :
| Collection Month | Quarter Ending | Due date of Payment | Due Date of filing return |
| April | 30th June | 7th May | 15th July |
| May | 7th June | ||
| June | 7th July | ||
| July | 30th September | 7th August | 15th October |
| August | 7th September | ||
| September | 7th October | ||
| October | 31st December | 7th November | 15th January |
| November | 7th December | ||
| December | 7th January | ||
| January | 31st March | 7th February | 15th May |
| February | 7th March | ||
| March | 7th April | ||
5. Certificate of TCS
1. When a tax collector files his quarterly TCS return i.e Form 27EQ, he has to provide a TCS certificate to the purchaser of the goods.This certificate has to be issued within 15 days from the date of filing TCS quarterly returns.
The due dates for for generating Form 27D–
| Quarter Ending | Date for generating Form 27D |
| For the quarter ending on 30th June | 30th July |
| For the quarter ending on 30th September | 30th October |
| For the quarter ending on 31st December | 30th January |
| For the quarter ending on 31st March | 30th May |
Notes :
1. Definition of Turnover :
No clarification has been provided by CBDT in this regard.
GST component is included while calculating the limit of section 44AB i.e. Tax Audit. Same interpretation is to be followed while calculating the threshold limit under this section i.e. GST component will included in sales. For eg, if Mr. A has turnover of Rs. 9cr (exclusive of GST) in FY 2021-22 and collected GST of Rs. 1.08cr, in that case total turnover for the purpose of this section is Rs. 10.08cr. Same conclusion applicable for calculating Rs. 50 lakhs threshold.
2. Whether TCS will be collected on GST portion?
Indirect taxes like GST forms integral part of the consideration and therefore TCS is collectible on sales price inclusive of GST and other indirect taxes.
A clarification in this regard is expected from CBDT. Till then the conservative view is to collect TCS on GST component as well.
3. TCS provisions not applicable where resident buyer furnishes a declaration to the person responsible for collecting tax, to effect that, the goods referred to above are utilized for the purposes of manufacturing, processing or producing articles or things or for the purposes of generation of power and not for trading purposes
4. The person responsible forcollecting tax shall deliver one copy of such declaration to the Chief Commissioner of Income Tax (CIT) / CIT on or before the 7th day of the month next after the month in which the declaration is furnished to him.
5. TCS should not be included in Value of Transaction for calculation of GST as CBIC has clarified through Corrigendum to Circular No. 76/50/2018-GST dated 7th March 2019 that Amount of TCS under Income Tax will not be part of Value under GST. Copy of the Circular is Appended herewith.
Appendix -1
From the Vendors of XXXX.
ON LETTERHEAD OF STATUTORY AUDITORS
To
M/s XXXX
Mumbai
Dear Sir,
Re : Confirmation of Turnover for the year ended 31.3.2020
Ref : Tax Collection at Source U/S 206C(1H)
As per the information and explanation given to us and records produced before us, We confirm that M/s. _______________________, having registered office at _________________, has achieved turnover of Rs . ___________ for the period ended 31.3.2020.
Thanking you
Yours faithfully
Place
Date
UDIN :
From the Vendors of XXXX.
ON SELLERS LETTERHEAD
To
M/s XXXX
Mumbai
Dear Sir,
Re : Confirmation of Turnover for the year ended 31.3.2020
Ref : Tax Collection at Source U/S 206C(1H)
We are enclosing herewith following :
1. Turnover Certificate for the period ended 31.3.2020
2. Since our turnover for the relevant period is below Rs 10 crores, we are not liable to collect Tax at Source for the sales made by us during the year ended 31.3.2021.
Or
3. Since our turnover for the relevant period exceeds Rs 10 crores, we shall be liable to collect Tax at Source for the sales made by us during the year ended 31.3.2021 under the provisions of Section 206 C (1H) of Income Tax Act.
Thanking you
Yours faithfully
Place
Date
Corrigendum to Circular No. 76/50/2018-GST
F.No. 20/16/04/2018 -GST Government of India
Ministry of Finance
Department of Revenue
Central Board of Indirect Taxes and Customs
GST Policy Wing
New Delhi, Dated the 7th March, 2019
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioners of Central Tax (All)
The Principal Director Generals/ Director Generals (All)
Madam/Sir,
Subject: Corrigendum to Circular No. 76/50/2018-GST dated 31st December, 2018 issued vide F.No. CBEC- 20/16/04/2018-GST- Reg.
Vide serial number 5 of Circular No. 76/50/2018-GST dated 31st December, 2018, it was clarified that the taxable value for the purposes of GST shall include the Tax Collected at Source (TCS) amount collected under the provisions of the Income Tax Act, as the value to be paid to the supplier by the recipient is inclusive of the said TCS.
2. In the light of the representations received from the stakeholders, the matter has been re-examined in consultation with the Central Board of Direct Taxes (CBDT). The CBDT has clarified that Tax collection at source (TCS) is not a tax on goods but an interim levy on the possible “income” arising from the sale of goods by the buyer and to be adjusted against the final income- tax liability of the buyer.
3. Accordingly, in No. 5 of the Circular No. 76/50/2018-GST dated 31st December, 2018:
| 5. | What is the correct valuation methodology for ascertainment of GST on Tax collected at source (TCS) under the provisions of the Income Tax Act, 1961? | 1. Section 15(2) of CGST Act specifies that the value of supply shall include “any taxes, duties cesses, fees and charges levied under any law for the time being in force other than this Act, the SGST Act, the UTGST Act and the GST (Compensation to States) Act, if charged separately by the supplier.”
|
| 2. It is clarified that as per the above provisions, taxable value for the purposes of GST shall include the TCS amount collected under the provisions of the Income Tax Act since the value to be paid to the supplier by the buyer is inclusive of the said TCS. |
Read
| 5. | What is the correct valuation methodology for ascertainment of GST on Tax collected at source (TCS) under the provisions of the Income Tax Act, 1961? | 1. Section 15(2) of CGST Act specifies that the value of supply shall include “any taxes, duties cesses, fees and charges levied under any law for the time being in force other than this Act, the SGST Act, the UTGST Act and the GST (Compensation to States) Act, if charged separately by the supplier.”
2. For the purpose of determination of value of supply under GST, Tax collected at source (TCS) under the provisions of the Income Tax Act, 1961 would not be includible as it is an interim levy not having the character of tax. |
2. It is requested that suitable trade notices may be issued to publicize the contents of this Circular.
3. Difficulty, if any, in implementation of this Circular may please be brought to the notice of the Board. Hindi version would follow.
(Upender Gupta)
Principal Commissioner (GST)
Author Bio
sir, we had claim tcs in sale bill 0.075% on before march-21 from party & payment recd after mar-21, now which date mention in tcs return in fy 2021-22 bill date or payment recd date.
TCS is based on actual payment /Receipt date and in your case the same is received post March 2021so it should be post March 2021
Dear Sir, Pl inform, TCS payment due date based on realisation cash or bill dates. example bill dt 28.2.2021 and payment received on 1.5.2021. whether Due date 7th march 21 or 7th June 2021. Pl reply
TCS is based on actual payment dates, and Tax Payment will have to be paid by 7th June 2021., however return will have to be filed by 15th July 2021.
TCS on Sales or Payment received?
This is very complicated calculation, Why this type of taxes implement by government.
Good article, giving a meticulous in depth analysis of a new provision. Perhaps one improvement can be made. Please refer to your para 3. “TCS provisions not applicable where resident buyer furnishes a declaration …”. If we make a closer scrutiny of section 206(1A), we may realise that it refers only to subsection (1) and not (1H). You may like to give a corrigendum.
Sir,
This is wrong commitment to impose the TCs at this time .
My turnover exceeds 10crore during 2019-20 and credit sales made to x from 1-04-2020to 30-09-2020 40lacs and amount received after 1-10-2020 and sales after 1-10-2020 to X approx 30lacs on credit ,so please clarify Tcs applicable on amount received or sales after 1-10-2020
Are Public Sector Undertakings exempt from this TCS provision?
Dear Sir,
Please clarify where below mentioned content given in income tax act.
“TCS provisions not applicable where resident buyer furnishes a declaration to the person responsible for collecting tax, to effect that, the goods referred to above are utilized for the purposes of manufacturing, processing or producing articles or things or for the purposes of generation of power and not for trading purposes”
Regards
M.K.Mishra
Whether TCS on freight applicable on not
3. TCS provisions not applicable where resident buyer furnishes a declaration to the person responsible for collecting tax, to effect that, the goods referred to above are utilized for the purposes of manufacturing, processing or producing articles or things or for the purposes of generation of power and not for trading purposes
Very useful. Well narrated. Thank you.
Is turnover certificate from statutory auditor is mandatory, if turnover of the Seller exceeds Rs 10 Crores in F.Y. ended 31.3.2020?