TAX COLLECTION AT SOURCE [SEC. 206C (1H) OF INCOME TAX ACT, 1961]

Posted Date : 04-Oct-2020 , 11:56:59 am | Posted By CASANSAAR print

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Tax Collection at Source [Sec. 206C (1H) of Income Tax Act, 1961]

Introduction:-

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 1^st October, 2020.

Who is Liable to collect TCS?

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.

When to collect TCS?

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 30^th September, 2020 shall not be liable to collect the TCS.

At what Rate?

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 1^st October, 2020 to 31^st March, 2021.

Due date to deposit TCS:-

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

When to file TCS Return:-
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.

Illustrations:-

S.No	Seller	F.Y 2019-20	F.Y 2020-21	Buyer	Receipt till 30^th Sept	Receipt from 1^st 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].

[1] Items included in Sec.206C(1) are Alcoholic Liquor for human consumption, Tendu Leaves, Timber obtained under 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.
Sec. 206C(1F) Motor Vehicle (if the value exceeds 10laks)

[2] Due to Covid-19, for the 1^st & 2^nd Quarters of F.Y 2020-21 filing of TCS return is extended to 31-03-2021.

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