TCS on sale of goods – Amendment from 1st October 2020

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:-

Capture

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

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Reduction in TDS/TCS Rates

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TDS Returns Software for FY: 2021-22 Released

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On popular demand, we are pleased to announce the release of TDSMAN (FY: 2021-22). Now you can prepare TDS Returns for all quarters of FY: 2020-21 and all quarters of the next FY: 2021-22.

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  • All TDS/TCS Returns for FY: 2021-22
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Section 194C – TDS on Transporter

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Section 194C of the Income Tax Act, 1961 states that any payment to a transporter is subject to a Tax Deduction at Source (TDS) at the rate of:

1% in case if the payee is an Individual or a Hindu Undivided Family (HUF), and
2% in case of other payees (i.e. partnership firm, company, trust, body of individuals or association of persons)

TDS on transporter during the course of plying, hiring and leasing goods carriage

Previously, payment to transporters carrying on the business of plying, hiring, or, leasing of goods carriages was not liable to withholding tax if the transporter furnishes her/his permanent account number (PAN) to the payer.

It seems that the intention of having this provision was to exclude small transporters from the rigors of TDS provisions. But because of the way the section was drafted transporters were excluded from the TDS provisions if they had a PAN.

With a view to bring back the big transporters back into the TDS fold, from 1st June 2015 onward, Department made an exemption. This exemption would be available only to those transporters who own ten or less goods carriages at any time during the previous year. Such a transporter would also need to furnish a declaration to that effect to the payer along with the PAN.

There was also some bit of confusion in the minds of a few people as to whether the said section (and exclusion) applied to payers engaged in the business of transport or to payees engaged in the business of transport. To remove this confusion, it has now been clarified in the Memorandum to the Finance Bill that this exemption is available whether such amount is paid by a person engaged in the business of transport or otherwise.

With this addition to the Act, reporting all deductions w.r.t Nil TDS on transporter payment in quarterly return (26Q) is made compulsory.

Following are the documents which a Deductor is supposed to collect for such transactions:
– Self-attested copy of PAN Card
– Declaration of neither the contractor is registered nor is he the owner of more than 10 goods carriages.

Sections under which interest for various delays/ defaults need to be paid

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Sections under which interest for various delays/ defaults need to be paid

The sections under which interest for various delays/ defaults need to be paid are as follows:

  • Section 234A for delay in filing the return of income
  • Section 234B for default in payment of advance tax
  • Section 234C for deferment of payment of individual installment or installments of advance tax
  • Section 234D for excess refund granted to the taxpayer
  • Section 201(1A) for failure to deduct tax at source/delay in payment of tax deducted at source
  • Section 206C(7) is levied for failure to collect tax at source/delay in payment of tax collected at source

FAQ about CONSO File

 

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