TAX COLLECTION AT SOURCE [SEC. 206C (1H) OF INCOME TAX ACT, 1961]
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- Section 206C of the Income Tax Act provides for the collection of Tax at Source
- In order to widen and deepen the tax, a new sub-section (1H) is inserted with effect from 1st October, 2020.
- TCS is required to be collected by a Seller on consideration received from a Buyer for sale of any Goods.
- Seller: - means a person whose turnover in the financial year immediately preceding the year in which sale of goods takes place, exceeds Rs. 10 crores.
- Buyer:- means a person who purchase any goods (i.e. any other goods not covered by other provisions of section 206C[1]) from seller and value of goods during previous year exceeds Rs 50 lakh.
- Seller receives any amount as consideration for sale of any goods of the value exceeding Rs 50 lakh from any single buyer.
- TCS has to be collected at the time of receipt of such amount (i.e. on RECEIPT BASIS).
- Sale made to buyers up to 30th September, 2020 shall not be liable to collect the TCS.
- TCS shall be collected @0.1% of the amount in excess of Rs 50 lakh.
- If buyer does not provide the PAN/Aadhaar, TCS shall be deducted @1%.
- NOTE:- TCS rate has been reduced to 0.075% from 1st October, 2020 to 31st March, 2021.
- TCS collected by the seller shall be paid to the account of the Government by the 7th of the next month.
Return of TCS shall be filed by 15th day of the month succeeding to the quarter[2] & in case of March, the due date would be 15th May.
Non Applicability of this Section:-
- Where goods are exported out of India.
- Where the buyer is liable to deduct TDS and tax has been withheld on such amount.
- Cases covered by other TCS Provisions (Sec. 206C (1) & 206C (1F) & 206C (1G)).
- Where the buyer is the Central Government, State Government, Embassy, A high Commission, Legation or trade representation of foreign state.
- Where the buyer is a local authority as per explanation to section 10(20).
- Person importing goods into India.
| S.No | Seller | F.Y 2019-20 | F.Y 2020-21 | Buyer | Receipt till 30th Sept | Receipt from 1st October | TCS u/s.206C(1H) | Remarks |
| 1 | A | 11 Cr | 8 Cr | B | 23 Lakhs | 68 Lakhs | 4100 | 0.1% on 41 lakh (Being excess of Rs 50 lakh) |
| 2 | A | 8.5 Cr | 12 Cr | B | 23 Lakhs | 68 Lakhs | NA | As turnover in the FY 2019-20 not exceeding Rs 10 crore. |
| 3 | A | 13 Cr | 16 Cr | B | 76 Lakhs | 7 Lakhs | 700 | On Rs 7 lakh being turnover after 30th September |
| 4 | A | 11 Cr | 8 Cr | Central Govt | 53 lakhs | 25 Lakhs | NA | Since section 206C (1H) is not applicable if buyer is Central Govt. |
| 5 | A (Job Worker) | 14 Cr | 12 Cr | B (is liable to deduct TDS u/s.194C) | 35 Lakhs | 55 Lakhs | NA | Since TDS is already deducted on this transaction. |
| 6 | A (Car Dealer) | 20 Cr | 15 Cr | B (Car Buyer) | 0 | 25 Lakhs | NA | As on this transactions TCS shall be collect u/s 206C(1F) |
*Note with respect to transaction No:- 6; if the buyer purchases Car (6 No’s) worth 9 lakhs each, then the total consideration will be Rs.54 lakhs then Sec.206C(1H) will be attracted and not under 206C(1F) [Circular 17 of 2020 dt 29-09-2020].
Sec. 206C(1F) Motor Vehicle (if the value exceeds 10laks)
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