TCS on Sale of Goods w.e.f 01st oct-2020

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This discussion clarifies the Tax Collected at Source (TCS) rules for the sale of goods, effective from October 1st, 2020, under Section 206(1H) of the Income-tax Act. It outlines that sellers receiving ₹5 million or more in a financial year for goods must collect TCS at 0.1% on the amount exceeding this threshold. Specific rates apply for remittances outside India under the Liberalised Remittance Scheme (LRS), with reduced rates for education loans. The rules detail seller eligibility based on previous financial year turnover and list specific exclusions, such as government entities, imports, and goods covered by other TCS provisions.

MAHESHA R

MAHESHA R (Querist)

23 September 2020 Kindly advise the details how the TCS applicable for goods with details.

Deesha Shah

Deesha Shah (Expert)

23 September 2020 It is applicable to the Authorised Dealer who receives an amount or aggregate of amounts in a financial year exceeding 700000 for remittance outside India under Liberalised Remittance Scheme(LRS) from Buyer being a person remitting such amount outside India.
TCS Rates: Reduced rate applicable from 14/05/2020 to 31/03/2021 is 3.75% in normal case. In cases relating to amount remitted for pursuing education thru loans obtained from an educational institute, it is 0.375%.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

23 September 2020 Brief overview of TCS on sale of goods - Section 206(1H) of the Income-tax Act, 1961
SCOPE (IN BRIEF)
Seller who receives any amount as consideration for sale of any goods aggregating to 5 million Indian Rupee (INR) or more in a financial year from a buyer, at the time of receipt of such amount is required to collect tax at source (TCS) at the rate 0.1 per cent on the sale consideration exceeding INR 5 million as income-tax.

In the buyer fails to provide PAN/Aadhar, TCS shall be collected at the rate of 1 per cent.

SELLER WHO IS REQUIRED TO COLLECT TCS ON SALE OF GOODS
Every seller whose total sales, gross receipts or turnover from his business exceeds INR 100 million in the immediately preceding Financial Year.

SPECIFIC EXCLUSION
TCS on sale of goods under section 206(1H) shall not apply :

where buyer is required to withhold taxes and such buyer has done withholding of required amount.
on export of goods;
on goods that are specifically covered under sub-section (1), (1F) or (1G) of section 206, i.e.:
Alcoholic liquor for human consumption,
Tendu leaves,
Timber or any other forest produce,
Scrap,
Minerals, being coal, or lignite or iron ore,
Motor Vehicle,
Overseas tour package.
TCS is not to be collected when the sale is made to the Central or State Government or Embassy/High-commission, Consulate or Trade Representative/Local Authority.

TCS is also not applicable when sale is made to a person who is importing any goods into India.

MAHESHA R

MAHESHA R (Querist)

26 September 2020 Thank You For your Valuable information sir

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