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 Sale of Goods other than the sale of special category goods like Alcohol, Tobacco, Tendu Leaves, Timber wood, Minerals, Motor Vehicle of more than 10 Lakhs, etc.
Thus, the government has introduced a provision where the seller has to collect TCS on sale of any type of goods subject to some conditions.
Background
Now, let us look at the conditions and application of this provision.
Applicability
This provision has been made applicable from 1st 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 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 1st October 2020 to 31st 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) |
Due Date of making payment of TCS to Government
The TCS collected by the seller shall be paid to the account of the Government by the 7th of the next month in which the TCS is collected.
(Example: – For the month of October, Due Date of the deposit is 7th November.)
Due Date of Filing of Return by the seller
The Seller has to file a return in Form 27EQ on a Quarterly basis.
Due Dates of filing of Form 27EQ are: –
| Quarter | Due Date (Normally) |
| April – June | 15th July |
| July – September | 15th October |
| October – December | 15th January |
| January – March | 15th May |
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