The Provision of TCS reads 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 percent 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 percent", the words "one percent" 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 such 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.
From the above it follows :
- Sale to any person is liable for TCS
- Liable for TCS only if the sale consideration exceeds Rs. 50 Lakh in the Current Financial year
- The provision is effective from 1st Oct 2020
- The amount of sale if already exceeded 50 Lakh up to 30th Sept., next sale onward is liable for TCS
- Only the amount of sale consideration exceeding 50lakh is liable for TCS
- TCS not to be collected up to Rs. 50 lakh of sale consideration (it is different from TDS u/s. 194C where TDS is deducted on the entire amount on crossing the threshold)
- Sale Consideration= Value of Goods+GST+Cess+ any other amount charged in the sale invoice
- TCS is not on sale consideration billed but on the sale consideration received, and therefore the amount of Debit note to be added and the amount of credit note issued to the buyer shall be deductible.
- One may choose to collect TCS at the time of receipt of consideration
- My view is that the seller may choose to charge TCS in Invoice but can pay the same only on receipt of the payment
- The previous year referred to in the section means the Current Financial year as per the definition of Previous Year provided in the Income Tax Act.
- If the buyer has the PAN No., the TCS applicable is 0.10% (0.075% up to 31.03.2020) and if does not have PAN then the rate of TCS applicable is 1% (0.75% up to 31.03.2020)
- Packing forwarding, loading-unloading charges are liable for TCS
- The TCS is on the sale consideration received for the sale of Goods and therefore in my view, the amount of Freight charged separately, in case of the agreement which is not on FOR Buyer's destination basis, should not be included in the calculation of Rs. 50 Lakh and nor TCS is collectible on such amount.
- But, if the agreement or Purchase order of Buyer/Sale order provides for terms of sale on FOR basis TCS should be collected and the amount of freight should be included for calculation of Rs. 50 lakh threshold limit even if the freight invoice is raised separately.
- Interest or penalty on delayed payment shall also be liable for TCS
- Any amount charged for the late lifting of Goods is also liable for TCS
- It is applicable only to the assessee whose gross receipt or turnover in preceding FY (in 2019-20 for the Current FY) was more than Rs. 10 Crores.
For calculation of applicability of this provision, the turnover/gross receipts shall include the value of services provided by the assessee, export turnover, sale of scrap, fixed assets, govt. Benefits, interests, etc.
- If the Sale consideration is liable for TCS/TDS under any other Section then this TCS is not applicable e.g. Where TCS e.g. on scrap sale or sale of liquor or coal etc. or on sale of a Motor car or on purchase of a house is collected or TDS on interest on delayed payment of TDS on the freight or delayed lifting etc. is charged, TCS under this provision is not applicable.
- It may be noted that in the cases of the above example the TCS should not be collected under this subsection as the collection of TCS under this subsection shall not exonerate the assessee from the provision of other provision for TCS/TDS applicable to such transactions.
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