TCS application on Sales of Goods w.e.f 01 October 2020

TCS Applicabilty w.e.f 1st Oct 2020


You are hereby informed that Finance Bill, 2020, had introduced sub clause (1H) in section 206C to provide followings:

 

Every  seller, who receives any amount as consideration for sale of any goods of the value or aggregate of such value exceeding 50 lakh rupees in any financial year, {other than the goods covered in  sub-section (1) or sub-section (1F) or (1G)} shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 0.1 per cent of the sale consideration exceeding 50 lakh rupees as income-tax.

 

As a relief, rate of TCS has been reduced to 0.075% for the period from 01.10.2020 to 31.03.2021 due to the COVID-19 pandemic.


Thus, for the purpose of TCS compliance on account of section 206C(1H) please note that following procedural changes: 

  1. TCS applicable at the time of collection.  
  2. TCS will be charged on Total Invoice Value (inclusive of GST/VAT Amount)
  3. TCS Liability will be posted at the time of receipt of money for all modes of collection considering amount received is inclusive of TCS and only net of TCS amount will be available for upliftment of product.
  4. TCS will not be refunded in case of reversal or sales return. In case of refund , the same will be made at net amount i.e. amount received less TCS amount.
  5. TCS certificate will be available as per provisions of Income Tax Act.


Kindly adherence to above norm and support to comply with this new taxation rule effective 1st October 2020.



Regards


Paswara Group

Finance Act, 2020   [27th March, 2020]

In section 206C of the Income-tax Act with effect from the 1st day of October 2020,

(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 exceeding fifty lakh rupees in any previous year, other than the goods being exported out of India or goods covered in sub-section (1) or sub-section (1F) or sub-section (1G) shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 0.1 per cent. of the sale consideration exceeding fifty lakh rupees as income-tax.

Provided that if the buyer has not provided the Permanent Account Number or the Aadhaar number to the seller, then the provisions of clause (ii) of sub-section (1) of section 206CC shall be read as if for the words “five per cent.”, the words “one per cent.” had been substituted:

Provided further that the provisions of this sub-section shall not apply, if the buyer is liable to deduct tax at source under any other provision of this Act on the goods purchased by him from the seller and has deducted such amount.”

Explanation.––For the purposes of this sub-section,––

(a) “buyer” means a person who purchases any goods, but does not include,–
(A) the Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or
(B) a local authority as defined in the Explanation to clause(20)of section10;or
(C) a person importing goods into India or any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein;

(b) “seller” means a person whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the sale of goods is carried out, not being a person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.

Source: https://www.incometaxindia.gov.in/Documents/News/Finance-Act-2020.pdf

If you need any further clarification, kindly contact us.

Last Updated: 06 April 2020