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Tax Collected at Source TCS on Sale of Goods with 15 FAQs

u201cTax collected at Source on sale of Goods effective from 01st October 2020<br>Due date for filing Annual return and audit report under GST has been extended, tax payer got some relaxation however new compliance requirement has been introduced which is applicable from 01st October 2020 i.e. tax to be collected at source on sale of goods.u201d<br>Read more at https://taxguru.in/income-tax/tax-collected-source-tcs-sale-goods-faqs.html<br><br>

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Tax Collected at Source TCS on Sale of Goods with 15 FAQs

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  1. Tax Collected at Source (TCS) on Sale of Goods with15 FAQs taxguru.in/income-tax/tax-collected-source-tcs-sale-goods-faqs.html Tax collected at Source on sale of Goods effectivefrom 01st October2020 Due date for filing Annual return and audit report under GST has been extended, tax payer got some relaxation however new compliance requirement has beenintroduced which is applicable from 01st October 2020 i.e. tax to be collected at source on sale of goods. Vide Finance Bill, 2020 sub-section (1H) of section 206C of the Income Tax Acthas been introduced which has proposed for tax collection at source (‘TCS’ ,will use itin remaining part of post), originally it was scheduled to be effective from 01.04.2020but later has been provided that section will be effective from01.10.2020. I am just trying it explain in frequently asked question format, hope that it willmake easy to understand and comply withLaw:- First go through the extract of the provision which is being given below forready reference:- (1H) Every person, being a seller, who receives any amount as consideration for saleof any goods of the value or aggregate of such value exceeding fifty lakh rupees inany previous year, other than the goods being exported out of India or goods covered insub- 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 asincome-tax:

  2. 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 percent.” had beensubstituted: Provided further that the provisions of this sub-section shall not apply, if the buyer isliable to deduct tax at source under any other provision of this Act on the goods purchased by him from the seller and has deducted suchamount. Explanation. ––For the purposes of this sub-section,–– (a) “buyer” means a person who purchases any goods, but does not include,–– the Central Government, a State Government, an embassy, a HighCommission, legation, commission, consulate and the trade representation of a foreign State;or a local authority as defined in the Explanation to clause (20) of section 10;or a person importing goods into India or any other person as the CentralGovernment may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specifiedtherein; (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 theOfficial Gazette, specify for this purpose, subject to such conditions as may be specifiedtherein.’; Q1. who is liable to collectTCS? Ans. Seller whose total sales, gross receipt or turnover from the businesscarried on by him exceeds Rs.10 crores during the financial year immediately preceding financial year in which sale is carried out. It means total turnover of FY 2019-20of the seller should be more than Rs. 10crores. Q2. From whom TCS is to be collected? Ans. TCS is to be collected from the buyer whose aggregate purchases fromthe seller exceed Rs.50 lacs in the previousyear. Q3. On which amount TCS has to be collected? Ans. TCS is required to be collected only on sale consideration exceeding Rs. 50 lacs. In other words, TCS on first Rs.50 lacs is not required to becollected. Q4. What is rate of tax forTCS? Ans. Rate of TCS provided in the section is 0.1% of sale consideration butVide Press Release dated 13.05.2020 rate of tax has been reduced for thecurrent financial year to0.075%.

  3. Q5. Is there change in rate of Tax if buyer does not havePAN? Ans. In case, buyer does not provide PAN or Aadhar number to the seller rateof TCS shall be1%. Q6. Whom provision of TCS under this section is not applicable? Ans. This section does not apply to:- If Seller is collecting TCS under any other provisions of the section206C. If Buyer is liable to deduct TDS (Tax deducted at Source) under any Provisionsof the Income Tax Act and buyer has deductedTDS. Where buyer is Central government, State Government, Local Authority, Embassy, High Commission, legation, commission, consulate and the trade representation of a foreign State. But keep in mind that in case of Government Company likePSUs ,TCS would be applicable as these are not Government, it means If seller ismaking a sale exceeding Rs.50 lakhs to them , TCS needs to becollected. In case of export sale ‘directly or through merchantexporter’ In case of import of goods into Indiaand Any other person whom Government mayspecify. Based on clarification given by CBDT vide Circular No. 17 of 2020 Dated:29th September, 2020 transactions in securities and commodities which are traded through recognizedstock exchanges or cleared and settled by the recognized clearing corporation,including recognized stock exchanges or recognized clearing corporation located inInternational Financial ServiceCentre; transactions in electricity, renewable energy certificates and energy savingcertificates tradedthrough power exchanges registered in accordance with Regulation 21 of theCERC; For thispurpose,- “recognized clearing corporation”shall have the meaning assigned to it in clause (i)of the Explanation to clause (23EE) of section 10 of theAct; “recognized stock exchange”shall have the meaning assigned to it in clause (ii) ofthe Explanation 1 to sub-section (5) of section 43 of theAct;and “International Financial Services Centre”shall have the meaning assigned to itin clause (q) of section 2 of the Special Economic Zones Act,2005 Q7. When TCS is to collect at the time of invoice raised or sale considerationreceived? Ans. The collection is required to be made at the time of receipt of amount of sales consideration. Based on clarification given by CBDT vide Circular No. 17 of2020 Dated: 29th September, 2020

  4. Q8. How shall threshold limit of Rs.50 lakhs bedetermined? Ans. Since the threshold of fifty lakh rupees is with respect to the previous year, calculation of receipt of sale consideration for triggering TCS under sub-section (1 H) of section 206C shall be computed from 1st April, 2020. Hence, if a person being sellerhas already received fifty lakh rupees or more up to 30th September 2020 from a buyer, the TCS under sub-section (1 H) ofsection 206C shall apply on all receipt of sale consideration during the previous year, on orafter 1st October 2020, from such buyer (Based on clarification given byCBDT vide Circular No. 17 of 2020 Dated: 29th September, 2020) Q9. Is TCS is apllicable on advance receipt of saleconsideration? Ans. Yes , TCS shall be applicable for advance received on or after 01st October 2020 (Based on clarification given by CBDT vide Circular No. 17 of 2020 Dated:29th September, 2020) Q10. Sale was made before 01st October 2020 but sale consideration has beenreceived on or after 01st October 2020, Is TCS need to be collected on suchconsideration? Ans. Yes, you need to collect TCS on receipt of such sale consideration evensale happened before 30th Sep2020. (Based on clarification given by CBDT vide Circular No. 17 of 2020 Dated:29th September, 2020) Q11. whether adjustment is required to be made for sales return, discount or indirect taxes including GST for the purpose of collection of tax under sub-section (lH) ofsection ? Ans. No, adjustment on account of sale return or discount or indirect taxes includingGST shall be made for collection of since the collection is made with reference to receipt of amount of saleconsideration. Q12. Whether TCS under sub-section (1H) is to be collected and deposited in additionto TCS to be collected and deposited as per other provisions of section 206C of theAct. Ans. No, in case TCS is to be collected and deposited under any other provisionof section 206C, TCS is not to be collected and deposited under thissub-section. Q13. Whether TCS is to be collected on GST amountalso? Ans. In my understanding ,it is yes as sale consideration includestaxes. Q14. My company entered in AMC contract and my contractor is providing goods and services both , consideration of which is going to exceed Rs.50 lakhs during the year ,Do My company needs to collectTCS?

  5. Ans. No, As company will deduct TDS under section 194C and this sectionsays that TCS not needed to be collected where buyer is liable to deduct TDS underany provision of theAct. Q15. My company entered in to AMC contract but in case of any repair or replacementof item my contractor charge separate consideration for the supply of such items, does my company need to collectTCS? Ans. Yes , as there would be no TDS applicable on supply of such goodsand supply of such goods shall be treated a separatesale. Hope that it will make easy to understand the provisions and will make you ableto comply with law , in case any query please write or comment. Tags: FAQs,TCS Kindly Refer to Privacy Policy & Complete Terms of Use andDisclaimer. AuthorBio Name: CA CHANDRA KISHOREBAJPAI Qualification: CA in Practice Company: C.K.BAJPAI &ASSOCIATES Location: NEW DELHI, New Delhi, IN Member Since: 27 Mar 2018 | Total Posts:7 Has about 22 years of Post qualification experience as practicing CharteredAccountant and worked in Industry also at senior level. He is blend of the experiences asin-house member of industry and consultant being practicing CA because he was in practicesince 1999 to 2007 and in service from 2007 View FullProfile My PublishedPosts House Rent Allowance – A Tax planning tool forSalaried Impact of Section 194O on E commerce operator &participants Change in criteria of unit under MSMEAct Decisions taken by GST Council in its 32 Meeting on10.01.2019 Can Input Tax Credit of process loss/waste of Input betaken?

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