pri TDS and TCS On Purchase And Sale of Goods TDS and TCS On Purchase And Sale of Goods

Post approval of Union Budget 2021 buyer will be responsible to deduct TDS on purchase of goods @0.1% only with effect from 1st July 2021 if its turnover in Previous Financial year exceeds Rs 10 Cr, on purchase above 50 lakh and seller will be responsible to collect TCS under Section 206C(1H) only in case buyer fails to deduct TDS on purchase of goods.

And in case buyer turnover is below 10 Cr and seller turnover is above 10 cr in such case only seller will be responsible to collect TCS @0.1%.

By inserting new TDS Provisions  now government has made both buyer and seller responsible in TDS and TCS on sales and purchase of goods above 50 lakh and either of them will have to deduct or collect tax now.

Comparison of Provisions of TDS under Section 194Q and TCS under Section 206C(1H)

Basis TDS u/s 194Q TCS u/s 206C(1H)
W.e.f 01-July-2021 01-Oct-2020
On whom Person having turnover more than 10 crore in Previous Financial Year Person having turnover more than 10 crore in Previous Financial Year
Transaction On Purchase On Sale
From whom TDS will be deducted only if Purchase from single buyer exceeds Rs. 50 lakh during current year (Only on amount exceeding 50 lakh) TCS will be Collected only if sale to single Customer exceeds Rs. 50 lakh during current year (Only on amount exceeding 50 lakh)
Rate 0.1% 0.1%
Time At the time of credit in books or payment whichever is earlier At the time of receipt
Time limit to deposit 7th of the next month 7th of the next month
Important Please note

From 01 July, If your customer starts deducting your TDS u/s 194Q, then TCS is not to be collected.

Eg.

1)      If you and your customer both have turnover exceeding Rs. 10 crore in previous Financial Year, then you ought to have been collecting TCS on sales during the period Apr 21 – Jun 21. But, now from 01 July your customer will be liable to deduct TDS on your bill and you will not collect TCS.

2) If you have turnover exceeding Rs. 10 crore in previous Financial Year and your customer has less than 10 crore, , then you ought to have been collecting TCS on sales during the period Apr 21 – Jun 21. In this case, since your customer is not liable to deduct TDS on payment, so you will have to continue collecting TCS.

3)  If your sales are less then Rs. 10 crore in previous Financial Year, then none of the above section is applicable on you.

Author Bio

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Qualification: CA in Practice
Company: Arpan Jain & Co.
Location: Delhi, Delhi, India
Member Since: 02 Mar 2021 | Total Posts: 1

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