TCS on Sales of Goods-PAN & Aadhaar not linked

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If a buyer's PAN is not linked with their Aadhaar, sellers must collect TCS (Tax Collection at Source) at a higher rate of 5% on sales of goods exceeding £50 lakh in a financial year. This applies to the gross amount and should be clearly invoiced. The threshold is cumulative, and sellers need to verify PAN-Aadhaar status and report the collected TCS accurately.

CMA Sagar Das

CMA Sagar Das (Querist)

15 March 2024 If a buyer's PAN-Aadhaar is not linked then we, as a seller will collect TCS on Sale of Goods at which rate?

CMA Sagar Das

CMA Sagar Das (Querist)

18 March 2024 Please reply to the query

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)

11 July 2024 If a buyer's PAN is not linked with Aadhaar, the seller is required to collect TCS (Tax Collection at Source) at a higher rate of 5% on the gross amount of sale of goods exceeding ₹50 lakhs in a financial year. This higher rate is applicable under Section 206C(1H) of the Income Tax Act, 1961. Here are the key points to note:

1. **Applicability**: The higher TCS rate of 5% applies only when the buyer's PAN is not linked with Aadhaar and the gross amount of sale of goods or services by the seller exceeds ₹50 lakhs in the financial year.

2. **TCS Collection**: As a seller, you are required to collect TCS at the rate of 5% on the amount received or receivable from the buyer for sale of goods. This amount should be separately charged on the invoice issued to the buyer.

3. **Threshold Limit**: The threshold limit of ₹50 lakhs is calculated on a cumulative basis for all transactions with the buyer during the financial year. Once this threshold is crossed, TCS at the rate of 5% becomes applicable on subsequent transactions until the end of the financial year.

4. **PAN-Aadhaar Linkage**: It's important to verify the PAN-Aadhaar linkage status of the buyer before collecting TCS. If the buyer's PAN is linked with Aadhaar, the regular TCS rate as applicable under Section 206C(1) or (1F) will apply, depending on the nature of the transaction.

5. **Reporting**: Ensure that the TCS collected is reported correctly in your TCS return (Form 27EQ) filed with the Income Tax Department. The return should accurately reflect the TCS collected at the higher rate in cases where PAN is not linked with Aadhaar.

If you encounter scenarios where the buyer's PAN is not linked with Aadhaar, ensure compliance with the TCS provisions as per the Income Tax Act and consult with a tax professional for specific guidance tailored to your business transactions.

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