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Introduction:-

  • Section 206C of the Income Tax Act provides for the collection of Tax at Source
  • In order to widen and deepen the tax, a new sub-section (1H) is inserted with effect from 1st October 2020.

Who is Liable to collect TCS?

  • TCS is required to be collected by a Seller on consideration received from a buyer for the sale of any Goods.
  • Seller:- means a person whose turnover in the financial year immediately preceding the year in which sale of goods takes place, exceeds Rs. 10 crores.
  • Buyer:- means a person who purchases any goods (i.e. any other goods not covered by other provisions of section 206C [1] ) from the seller and the value of goods during the previous year exceeds Rs 50 lakh.

When to collect TCS?

  • Seller receives any amount as consideration for the sale of any goods of the value exceeding Rs 50 lakh from any single buyer.
  • TCS has to be collected at the time of receipt of such amount(i.e. on RECEIPT BASIS).
  • Sale made to buyers up to 30th September 2020 shall not be liable to collect the TCS.
TCS u/s 206C (1H) - A beginners guide

At what Rate?

  • TCS shall be collected @0.1% of the amount in excess of Rs 50 lakh.
  • If the buyer does not provide the PAN/Aadhaar, TCS shall be deducted @1%.
  • NOTE:-TCS rate has been reduced to 0.075% from 1st October 2020 to 31st March 2021.

Due date to deposit TCS:-

TCS collected by the seller shall be paid to the account of the Government by the 7th of the next month.

When to file TCS Return:-

Return of TCS shall be filed by the 15th day of the month succeeding to the quarter [2] & in the case of March, the due date would be 15th May.

Non Applicability of this Section:-

  • Where goods are exported out of India.
  • Where the buyer is liable to deduct TDS and tax has been withheld on such amount.
  • Cases covered by other TCS Provisions (Sec. 206C (1) &206C (1F) &206C (1G)).
  • Where the buyer is the Central Government, State Government, Embassy, A high Commission, Legation, or trade representation of a foreign state.
  • Where the buyer is a local authority as per explanation to section 10(20).
  • A person importing goods into India.
 

Illustrations:-

S.No

Seller

F.Y 2019-20

F.Y 2020-21

Buyer

Sales till 30th Sept

Sales from 1st October

TCS u/s.206C(1H)

Remarks

1

A

11 Cr

8 Cr

B

23 Lakhs

68 Lakhs

4100

0.1% on 41 lakh (Being excess of Rs 50 lakh)

2

A

8.5 Cr

12 Cr

B

23 Lakhs

68 Lakhs

NA

As turnover in the FY 2019-20 not exceeding Rs 10 crore.

3

A

13 Cr

16 Cr

B

76 Lakhs

7 Lakhs

700

On Rs 7 lakh being turnover after 30th September

4

A

11 Cr

8 Cr

Central Govt

53 lakhs

25 Lakhs

NA

Since section 206C (1H) is not applicable if the buyer is Central Govt.

5

A (Job Worker)

14 Cr

12 Cr

B (is liable to deduct TDS u/s.194C)

35 Lakhs

55 Lakhs

NA

Since TDS is already deducted on this transaction.

6

A (Car Dealer)

20 Cr

15 Cr

B (Car Buyer)

0

25 Lakhs

NA

As on this transactions, TCS shall be collect u/s 206C(1F)

 

*Note with respect to transaction No:- 6; if the buyer purchases Car (6 No’s) worth 9 lakhs each, then the total consideration will be Rs.54 lakhs then Sec.206C(1H) will be attracted and not under 206C(1F) [Circular 17 of 2020 dt 29-09-2020].

  • [1] Items included in Sec.206C(1) are Alcoholic Liquor for human consumption, Tendu Leaves, Timber obtained under forest lease, Timber obtained by any mode other than under a forest lease, Any other forest produces not being timber or Tendu leaves, Scrap, Minerals, being coal or lignite or iron ore. Sec. 206C(1F) Motor Vehicle (if the value exceeds 10laks)
  • [2] Due to Covid-19, for the 1st& 2nd Quarters of F.Y 2020-21 filing of TCS return is extended to 31-03-2021.

Know about the practicality of TCS section 206C (1H) in detail. Read now!


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Category Income Tax, Other Articles by - CA Santhosh Gupta Kethepalli 



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