Section 206(1C)

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This discussion clarifies whether Tax Collected at Source (TCS) under Section 206(1C) applies to the basic value of goods or the total invoice value including GST. The guidance confirms that TCS should be collected on the sale consideration inclusive of GST. This is based on CBDT Circular No. 17, which states that TCS is collected with reference to the receipt amount, and no adjustment is needed for indirect taxes like GST.

Janki Pithadia

Janki Pithadia (Querist)

01 October 2020 whether TCS u/s 206(1C) will be Levied on Basic value plus GST amount or only on the basic amount ???
any clarification regarding that issue???

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

01 October 2020 TCS u/s 206(1C) will be Levied on Basic value plus GST amount.

FAQ 17. Whether TCS is to be collected on the total invoice value including the
GST?
Section 206C(1H) provides that TCS shall be collected on the consideration for "sale of
any goods". Thus, in common parlance, the price bargained for the goods could be
regarded as consideration of goods. The question arises whether the GST shall form
part of the consideration or not.
The CBDT vide Circular No. 17, dated 29-09-2020, has clarified that since the collection
is made with reference to receipt of the amount of sale consideration, no adjustment
on account of indirect taxes including GST is required to be made for the collection of
tax under this provision. Thus, TCS is required to be collected on the sale
consideration inclusive of GST.