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TCS under newly introduced Sec. 206C(1H) of the The Finance Act, 2020 (w.e.f. 01-Oct-2020)

By  September 24, 2020  

Applicable to:

  1. In case of seller whose total sales, gross receipt or turnover from the business carried on by him exceeds Rs. 10 crores during the financial year immediately preceding financial year in which sale is carried out. This section is not applicable in respect of exports. That means the applicability of provision will have to be checked every year.
  2. TCS is required to be collected from the buyer whose aggregate purchases exceed Rs.50 lacs in any previous year. However, TCS is required to be collected only on sale consideration exceeding Rs. 50 lacs.
  3. Rate of TCS provided in the section is 0.1% of sale consideration. Due to Covid-19 Pandemic, rate of tax has been reduced by 25% for the current financial year. Hence, Rate of TCS will be 0.075% w.e.f. 14.05.2020.
  4. Rate of TCS provided in the section is 1%, if PAN or Aadhar Card not available . However, reduction of 25% in the rate of TCS is not applicable.

 Features:

  • Applicable on sale of all goods except exports of goods and goods those are covered under the other provisions of TCS.
  • Applicable if the value aggregate value of sales consideration is above Rs. 50 lacs during the year and applicable at the time of receipt of the consideration for an amount received in excess of Rs. 50 lacs.
  • TCS should be charged in the invoice (including GST) to be raised for sale of goods. (Required clarification by CBDT)
Not Applicable to:

The provisions of this section is not applicable to the buyers listed hereunder:

  • Central Government, State Government, an Embassy, a High Commission, Consulate, and the trade representation of foreign states.
  • Local Authority
  • Person importing goods
  • Any other person as notified by the Government.
  • TCS is not to be collected where buyer is liable to deduct TDS and has deducted TDS on value of goods.
TCS Payments & Returns:
  • TCS collected need to be paid within 7 days of the next month.
  • Quarterly statement need to be filed as described hereunder:

  • Quarter

    Due Date

    Certificate

    Due Date

    Apr-Jun

    15th July

    30th July

    Jul-Sep

    15th Oct

    30th Oct

    Oct-Dec

    15th Jan

    30th Jan

    Jan-Mar

    15th May

    30th May

-------------------------Original Wordings of The Finanace Act, 2020-------------------------

 Amendment of section 206C
(Published by The Gazette of India for The Finance Act, 2020 dated 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 section 10; 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.’;