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TDS And TCS under Income Tax

TDS and TCS are the government's most important sources of revenue. It's also critical for businesses to pay their taxes on time to avoid penalties and remain compliant. With effect from 01/07/2021, Finance Act of 2021 inserted section 194Q to provide a deduction of tax on certain purchases. Section 194Q of the Income tax Act states that any person("buyer") purchases goods exceeding 50 lakhs rupees from a resident seller in any previous year. At the time of making the paymen..

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Higher Rate of TDS and TCS under Section 206AB and 206CCA

Finance Act, 2021 inserted two sections 206AB - tax deduction and 206CCA - tax collection which came into effect from 1 July, 2021. These sections were amended through the Finance Act, 2022. What does Section 206AB and 206CCA say? Section 206AB and 206CCA mandate tax deduction and tax collection, respectively, at a higher rate in case of Specified Persons.   Who are Specified Persons? Specified persons are those persons who satisfies both the conditions stated below: He..

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Central Government withdraws 5% TCS on tour package of NRIs visiting India

Central Government relaxes provisions of TCS under section 206C(1G) of the Income-tax Act, 1961 in respect of non-resident individuals visiting India Section 206C (1G) of the Income-tax Act, 1961 ("the Act") provides for collection of tax by a seller of an overseas tour programme package from a buyer, being a person purchasing such package, at the rate of 5% of the amount of the package. Representations were received from domestic tour operators who were facing difficulties in co..

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Guidelines on TDS/TCS u/s 194O, 194Q & 206C

The Central Board of Direct Taxes (CBDT) has issued the further Guidelines for Section 194-O, Section 194Q, and Section 206C (1-I) of Income Tax Act, 1961 vide a Circular No. 20/2021 dated 25th November 2021 for removing certain difficulties. The Finance Act, 2020 and the Finance Act, 2021 have inserted sections 194-O, 194Q, and 206C(1H) to the Income-tax Act for mandating deduction and collection of tax at source on certain transactions. The guideline on TDS/TCS under Section 194O, section 194Q..

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Section 206AB and 206CCA - Special Provision for Deduction/Collection of TDS/TCS for non-filers of ITR

Special provision for deduction of tax at source for non-filers of income-tax return 206AB. (1) Notwithstanding anything contained in any other provisions of this Act, where tax is required to be deducted at source under the provisions of Chapter XVIIB, other than section 192, 192A, 194B, 194BB, 194LBC or 194N on any sum or income or amount paid, or payable or credited, by a person (hereafter referred to as deductee) to a specified person, the tax shall be deducted at the higher of the follow..

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TDS and TCS on Purchase of Goods Under Income Tax

With the effect of 1. 07.2021 Finance Act, 2021 had inserted section 194Q in Income Tax Act, 1961 to provide a deduction of tax on certain purchases. Section 194Q of the Income-tax Act states that any person who buys goods of an amount exceeding 50 lakhs rupees from a resident seller in any previous year shall at the time of making the payment or at the time of making such credit to the account of the seller, whichever is earlier deduct an amount of 0.1% of such amount exceeding 50 lak..

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Section 194Q and 206C(1H) - Lets resolve the confusion

The basic difference between TDS and TCS is that TDS is deducted by the buyer and TCS is collected by the seller. Learning this with a basic example, suppose you entered into a transaction and bought some goods on which TDS is applicable. It will be your responsibility to deduct the TDS before paying the seller the consideration for the goods/services. Similarly, suppose you enter into a transaction on which TCS is applicable. The seller supplies the goods/ service. While making a payment to ..

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Compliance Check Functionality for Section 206AB & 206CCA

TDS / TCS - Compliance Functionality for Section 206AB & 206CCA for Non-filers using Online Utility   A new tax rule relating to the TDS and TCS has come into force from 01.07.2021 under which the the taxpayers who has not filed their Income Tax Returns for the past two Financial Years shall have to pay higher tax. It is important to note here that the Income Tax Department had introduced two new sections namely Section 206AB and Section 206CCA with a purpose of deducting TDS at..

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TCS Rate Chart for FY 2021-22

TCS Rates for Financial Year 2021-22(A.Y.2022-23)   TCS RATES Section Nature of Payment Threshold Limit of Payment Rates 206C (1) Sale of Scrap   1.00% 206C (1) Sale of Tendu Leaves   5.00% 206C (1) Sale of Timber obtained unde..

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TCS On sale of Goods - New Income Tax Compliance w.e.f 1st October 2020

With a view to widen the tax-net, the Indian government has extended the scope of Tax Collected at Source ('TCS'). The Government of India has added a new sub section (1H) in the section 206C which would be called as section i.e. 206C (1H) of the Income Tax Act, 1961 with regards to 'Tax Collection at Source'. What is Section 206C (1H)? 'Every person, being a seller, who receives any amount as consideration for sale of any goods of the value or aggregate of such value e..

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Treatment of GST for TDS/TCS on purchase/sale of goods

Arjuna (Fictional Character): Krishna, Section 194Q for TDS deduction on the purchase of goods has become effective from 1.7.2021, whereas TCS collection on sale of goods is already applicable from last year from 1.10.2020, but there is confusion regarding the treatment of GST amount while applying the provisions of these sections. Krishna (Fictional Character): Arjuna, the taxpayer has to consider his method of accounting for the purpose of treatment of GST amount. Also, CBDT has issued circ..

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Which Section 194Q or 206C(1H) will be applicable?

1. What is Section 194Q and 206C(1H)? Section 194Q is for Tax deducted at source (TDS) applicable from 01.07.2021 and Section 206C(1H) is for Tax Collected at source(TCS) applicable from 01.10.2020.   2. When is a person liable to deduct TDS u/s 194Q and TCS u/s 206C(1H)? TDS is to be deducted under Section 194Q when the following conditions are satisfied- The person (who is a buyer) has turnover/gross receipts/Sales from business of above Rs.10 crore during th..

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New TDS sections inserted by Union Finance Bill 2021 and audit implications

Introduction The Finance Bill 2021 has introduced following new sections in relation to Tax Deducted at source (TDS) and Tax Collected at source (TCS): Section 194Q- TDS on purchase of goods Section 206AB: Higher rate of TDS for non filers of Income tax return Section 206CCA: Higher rate of TCS for non filers of Income tax return Section 194 P: TDS in case of specified senior citizen Out of the above 4 newly introduced sections, section 194Q, 206AB and 206CCA will have major ..

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TDS Under Section 194Q v/s TCS under section 206C(1H)

Who is liable to deduct TDS u/s 194Q? Buyer will deduct TDS of seller As per section 194Q, When a Buyer who is responsible for paying any sum to any resident seller for purchase of any goods of the value or aggregate of such value exceeding Rs.50 Lakhs during the year, he shall deduct TDS @0.10%, on amount exceeding Rs.50 Lakhs. In non-PAN/ Aadhaar cases, the rate shall be 5%. TDS u/s 194Q = 0.1% of [Total Purchases (Minus) Rs. 50 Lakhs] From when does provision of section 194Q are a..

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TDS and TCS on purchase and sale of goods

  Basis TDS u/s 194Q TCS u/s 206C(1H) W.e.f 01-July-2021 01-Oct-2020 On whom Person having turnover more than 10 crore in Previous Financial Year Person having turnover more than 10 crore in Previous Financial Year Transaction On Purchase On Sale From whom T..

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TDS/TCS at higher rates in case of non-filers of ITR: Section-206AB & 206CCA

Introduction A new section 206AB & 206CCA introduced In the Budget 2021 22 which will be effective from 1st July 2021. The said section provides for higher rate of TDS/TCS to be applied if the transactions are done with the non filers of income tax return. To increase the taxpayer base in the country, the non filers are now obligated to file income tax return.   Applicability of Section 206AB & 206CCA With effect from July 1, 2021, a person will have to pay TDS/TC..

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Tax Implications on Forex Transactions: TCS on Remittances Outside India

Forex Transactions refer to transferring funds from one country to another. There could be various personal as well as business-related reasons due to which funds are required to be remitted abroad. But have you ever wondered what the tax implications on Forex transactions are? What is the mechanism for paying tax on Forex transactions? Heard about Liberalized Remittance Scheme but don't know what exactly it is? Let's walk through this article to get the answers to all these questi..

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Understanding penalty provisions for failure to furnish the TDS/TCS statements

Before understanding the penalty provisions for failure to furnish the statement of Tax Deducted at Source or statement of Tax Collected as Source (i.e. commonly known as TDS/TCS return) we shall first have a look at the few basic duties of a person liable to deduct/collect tax at source and due dates for filing of TDS/TCS return. Duties of the person liable to deduct/collect tax at source He shall obtain Tax Deduction Account Number or Tax Collection Account Number (as the case may be) an..

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Concept of TCS and practical issue under GST

This article will help you to solve your problems related to 2 important areas under GST Concept of TCS and related Provision Practical problem/doubts 1. What is TCS? TCS is a tax which is collected by the electronic commerce operator (ECO) from buyer who places an order online and made a payment to online seller (who delivered the products or services) after deducting Commission and TCS @1%. Concept of TCS on GST is applicable from 1st October, 2018. 2. Who is an ECO? A..

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TDS on Purchase or TCS on Sale: Hassle?

People generally refer hassle as an irritating inconvenience. And the taxpayers are facing a similar inconvenience to apprehend the applicability of the provisions of TDS on Purchase or TCS on Sale on a single transaction. Last year in Finance Act 2020, Government has introduced Sub-Section (1H) in Section 206C which provide for the collection of Tax (TCS) by seller from the amount received as consideration for sale of goods exceeding Rs 50 Lacs in any previous year. Also, this section is app..

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