Sec-206c | Tax Collected at Source (TCS) on Sale of goods w.e.f 01st October 2020.

Finance Act 2020 introduced a new provision under Section 206C (1H) for the Tax Collected at Source (TCS) on Goods With effect from 1st of October 2020.

(1H) “Every person, being a seller, who receives any amount as consideration for the sale of any goods of the value or aggregate of such value exceeding 50 Lakhs 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 percent. of the sale consideration exceeding 50 Lakhs 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,–

The Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or
A local authority as defined in the Explanation to clause(20)of section10;or
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.

Let's Understand in Simple Words about this section

Applicability

This provision has been made applicable from 1st October 2020.
TCS shall be applicable where the seller receives any amount as consideration of more than Rs. 50 Lakhs from a single buyer for the sale of ANY GOODS.

Seller may be any person i.e. it can be Individual, Firm, AOP/BOI, Company, or any other form.

When to Collect

The TCS has to be collected at the time of receipt of such amount i.e. TCS shall be collected on Receipt Basis.

Rate and Ceiling Limit

TCS shall be collected at the rate of 0.1% of the amount in excess of Rs. 50 Lakhs.

If the buyer does not have PAN no. then the rate shall be 1 %.

(Note: – TCS rate has been reduced to 0.075% for the period 1st October 2020 to 31st March 2021.)

Non- Applicability

TCS shall not be applicable in the following cases: –
Where the turnover of the Seller is less than 10 crore in the preceding Financial Year.
Where the goods are exported out of India.
Where any TDS provision is applicable to such goods.
Where the buyer is the Central Government, State Government, Embassy, High Commission, legation, or trade representation of a foreign state.
Where the buyer is a local authority as per Explanation to Section 10(20).
Where the seller is dealing with the following goods: –

Section 206C(1)

Alcoholic Liquor for human consumption
Tendu leaves
Timber obtained under a forest lease
Timber obtained by any mode other than under a forest lease
Any other forest produce not being timber or tendu leaves
Scrap
Minerals, being coal or lignite or iron ore

Section 206C(1F)

Motor vehicle (if the value exceeds 10 Lakhs)

Section 206C(1G)

Sum of money (above 7 Lakhs) for remittance out of India.
Seller of an overseas tour program package.

Due Date of making payment of TCS to Government

The TCS collected by the seller shall be paid to the account of the Government by the 7th of the next month in which the TCS is collected.

(Example: – For the month of October, Due Date of the deposit is 7th November.)

Summary

Every seller, whose total sales, gross receipts or turnover from the business carried on by him exceed ₹ 10 Crores during the FY 2019-20 & onwards, who receives any amount as consideration for the sale of any goods (excluding exports) of the value or aggregate of such value exceeding ₹ 50 Lakhs in any previous year shall at the time of receipt of such amount collect a sum equal to 0.1% of the sale consideration exceeding ₹ 50 Lakhs as Tax Collected at Source (TCS) from the buyer.

If the buyer has not provided the Permanent Account Number or the Aadhaar number to the seller, then the applicable rate of TCS will be 1 PERCENT.

All the other compliances like payment, filing of form/return, and issuing of certificate remains the same. In case of Non-compliance, there still exist the assesse in default provision.

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

DISCLAIMER :
The information contained herein is generic in nature and is meant for basic educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product/Examnination purpose. Subject to Amendments. Yogesh Suthar is not liable for any decision arising out of the use of this information.