TCS ON SALE OF GOODS – NEW PROVISION

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TCS ON SALE OF GOODS – NEW PROVISION

TCS (Tax Collected at Source) is a tax that is collected by the seller from the buyer and deposited to the account of the government on behalf of the buyer.

As such, there are no TDS/ TCS provisions on the Sale of Goods other than the sale of special category goods like Alcohol, Tobacco, Tendu Leaves, Timber wood, Minerals, Motor vehicles of more than 10 Lakhs, etc.

Thus, the government has introduced a provision where the seller has to collect TCS on the sale of any type of goods subject to some conditions.

Background

Section 194Q – TDS on Purchase of Goods (w.e.f. 1st July 2021)

Difference between Section 194Q and Section 206C(1H)

Now, let us look at the conditions and application of this provision.

INTRICACIES – TCS ON SALE OF GOODS

Applicability

This provision has been made applicable from 1^st October 2020.

TCS shall be applicable where the seller receives any amount as consideration of more than Rs. 50 Lakhs from a single buyer for the sale of ANY GOODS.

Seller may be any person i.e. it can be Individual, Firm, AOP/BOI, Company, or any other form.

When to Collect

The TCS has to be collected at the time of receipt of such amount i.e. TCS shall be collected on a Receipt Basis.

Rate and Ceiling Limit

TCS shall be collected at the rate of 0.1% of the amount in excess of Rs. 50 Lakhs.

If the buyer does not have PAN no. then the rate shall be 1 %.

(Note: – TCS rate has been reduced to 0.075% for the period 1^st October 2020 to 31^st March 2021.)

Non- Applicability

TCS shall not be applicable in the following cases: –

Where the turnover of the Seller is less than 10 crore in the preceding Financial Year.
Where the goods are exported out of India.
Where any TDS provision is applicable to such goods.
Where the buyer is the Central Government, State Government, Embassy, High Commission, legation, or trade representation of a foreign state.
Where the buyer is a local authority as per Explanation to Section 10(20).
Where the seller is dealing with the following goods: –

Items	Section for TCS
– Alcoholic Liquor for human consumption – Tendu leaves – Timber obtained under a 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	Section 206C(1)
Motor vehicle (if the value exceeds 10 Lakhs)	Section 206C(1F)
– Sum of money (above 7 Lakhs) for remittance out of India – Seller of an overseas tour program package	Section 206C(1G)