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

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From 1st October 2020, the rules for Tax Collected at Source (TCS) on the sale of goods have changed. The trigger for TCS is now based on the receipt of sale consideration exceeding Rs. 50 lakhs in a financial year, rather than the invoice date. This means TCS applies to amounts received, including advances, even if the sale occurred before the new rules came into effect. Adjustments for sales returns and discounts are made on the actual amount received.

MAHESHA R

MAHESHA R (Querist)
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29 September 2020 Kindly advise the TCS is applicable for the following

1. Sales made to one customer worth of Rs.40 lakhs from April-2020 to 29-09-2020 but receipt from this customer from 01-04-2020 to till date is more than Rs 50 Lakhs.

In the above case from 01-10-2020 invoices shall i Consider for TCS @ 0.075%.

or kindly explain when we have to consider for tcs

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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29 September 2020 In the above case from 01-10-2020 invoices you Consider for TCS @ 0.075%.

Ramesh

Ramesh (Expert)
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30 September 2020 Sir,

The Government of India has issued guidelines on 29th September, 2020 which has entirely
changed the Concept of TCS.

Trigger Point of TCS :
Rs. 50 Lakhs of Receipt of Sale Consideration.
So irrespective of Sales, Collection of TCS is triggered when we receive the Sale Consideration
(including advance receipts) exceeding Rs. 50 lakhs. (Sale consideration will include GST
amount)
Relevance to the period of sales not to be seen. If we have received the sale consideration of
any earlier year or period, TCS will be applicable even if the sale was carried out before 1st
October, 2020.
Since, Trigger point of TCS interpreted based on the reading of Section was “Sale of Goods”,
has been shifted to “Receipt of Sale Consideration”. We don’t have to charge TCS on Invoice
and Pay TCS based on Invoice date.

For e.g. Even if there is No Sales till Sept’20, but we have received old outstanding of Rs. 60
lakhs during the period Apr’20 – Sept’20, then after 1st Oct, 2020 sales of Rs. 10 lakhs has
been made and the consideration is received before Mar’21 then TCS will be liable on Rs. 10
lakhs. But if the same is received after Apr'21 then again a separate threshold of Rs. 50 lakhs
will be available.
 Adjustment for Sale return and Discount:
No Separate adjustment to be made for Sale return or Discount as TCS is to be collected on
‘Actual Receipt of Sale Consideration’ i.e. net off return / discount.
 Threshold Limit:
For calculating threshold limit, the receipt of sale consideration during the entire
financial year should be considered.

In view of above, I understand that it is not invoices but consideration received from 01Oct2020 should be considered.

Pl. advise
Thanks
Ramesh

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MAHESHA R

MAHESHA R (Querist)
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01 October 2020 Thank you very much for your information sir

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