In the Finance Act 2020, a new sub section has been added which is vide Section 206C (1H) to give effect to the Tax collected at source (TCS) on sales of goods. From 1st October 2020, onwards TCS will be applicable on all goods. Whereas before adding this sub-section, TCS was applicable on some specified goods.
1. Applicability
• It requires the seller to collect TCS on account of sale of all goods made to the buyer in a single transaction or in aggregate during the financial year over and above the sale amount of Rs. 50 Lakhs
• TCS will be applicable for every seller whose turnover from the business, exceeds RS.10 ‘Crore during the FY: 19-20 & onwards
• This section will be applicable from 1st October 2020. It means only amount received for sale after 1st October 2020, is liable for this section
• Rate of TCS from the above mentioned date on all goods will be 0.075% (till 31.03.2021)
• Non availability of PAN or Aadhaar No. of the buyer shall attract TCS at the rate of 1%
2. Non-applicability
• If the total turnover of the seller in FY: 19-20 is less than Rs. 10 Crore, then the section will not be applicable for the FY: 20-21
• If on a particular transaction, if the buyer is liable to deduct TDS under any other provision of the Act and has deducted such amount on the goods purchased by him, then on that same transaction seller do not require to collect TCS
• TCS will not be applicable for Central government, State government, Local authority, Importer of goods, Trade representation of a foreign state, High commission, Embassy and Legation
3. Examples
Case 1: Turnover of seller in FY: 19-20 is Rs. 9 Crore (Which is less than Rs.10 Crore)
Amount of the sale made to a particular buyer during FY: 20-21 is Rs.80 Lakhs (Which is more than Rs.50 Lakhs).
The buyer made payment to the seller of Rs. 80 lakhs during the FY: 20-21.
In such case, there is no applicability of TCS, as the turnover criteria is not met.
Case 2: Turnover of seller in FY: 19-20 is Rs. 12 Crore (Which is more than 10 crore).
Amount of the sale made to a particular buyer during FY: 20-21 is Rs.80 Lakhs (Which is more than Rs.50 Lakhs).
The buyer made payment to the seller of Rs. 80 lakhs during the FY: 20-21.
In such case, value for calculation of TCS will be the surplus amount of the total transaction, which is 30 lakhs (80L-50L)
Case 3: Turnover of seller in FY: 19-20 is more than 10 Crore
Amount of sale made to a particular buyer during the FY: 20-21 is Rs. 1 Crore
Buyer made payment to seller between 01/04/2020 to 30/09/2020 = Rs.90 Lakhs
Buyer made payment to seller between 01/10/2020 to 31/03/2021 = Rs.10 Lakhs
In such case, only Rs. 10 Lakhs will be valued for calculation of TCS and not on Rs. 50 Lakhs
(I.e. Total amount is Rs.1 crore, and Rs. 50 lakh is the Threshold amount, by including the amount before 1st October)
4. The due date for depositing TCS is the 7th of next month. Every person who is collecting TCS is required to submit a quarterly TCS return in Form – 27EQ. The due dates for filing of TCS returns are mentioned below:-
5. The main intend to the section 206C(1H) is to provide more check for the database to the government to track the high value transactions.
Source : Income Tax
Coexistence of TDS 194Q and TCS 206C(1H) after Budget of 2021