TCS on Sale of Goods – Sec 206C(1H)

Last updated on May 16th, 2021 at 05:52 pm

TCS on Sale of Goods – Sec 206C(1H)

The Finance Act, 2020 had introduced the new section 206C(1H) of the Income Tax Act, 1961 for Tax Collected at Source on sale of goods. The said provisions were made applicable from 1st October 2020.

TCS u/s 206C(1H)

What is TCS?

Tax Collected at Source (TCS) are provisions under the Income Tax Act for collecting tax at source on certain transactions.

TDS vs TCS

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Such amount of TCS is considered as payment of Income Tax and deductible from total income tax liability of purchaser at the time of filing of return of income. (similar to TDS).

Applicable to whom?

• Applicable to all the sellers selling goods.
• The term ‘seller’ has been defined in the Act. Seller means a person whose total sales, turnover or gross receipts from the business carried on by him exceeds Rs. 10 crores during the financial year immediately preceding financial year.
• Accordingly, all the sellers having sales/turnover/gross receipts from business exceeding Rs. 10 Crore in the financial year 2020-21 will be required to collect TCS in the year 2021-22.
• If any person has turnover below Rs. 10 Crore during the immediately preceding year then these provisions are not applicable. That means the applicability of the provision will have to be checked every year.

Salient Features

• Applicable on sale of all goods except the export of goods and goods already covered under other provisions of TCS.
• TCS provisions are applicable if the value or aggregate value of sales consideration exceeds Rs. 50 lacs during the year.
• TCS is applicable to the amount received in excess of Rs. 50 lacs.
• TCS provisions are applicable at the time of receipt of consideration.

Rate of TCS

• TCS Rate will be 0.1 % if the buyer furnishes the PAN/Adhaar (Reduced to 0.075% up to 31.3.2021).
• TCS Rate will be 1% if the buyer does not furnish PAN/Adhaar (Reduced to 0.75% up to 31.3.2021).

Will it be applicable to all the buyers?

NO. If the buyer is any of the following person then TCS provisions u/s 206C(1H) are not applicable.

1. Central Government, State Government, an Embassy, a High Commission, Consulate, and the trade representation of foreign states.
2. Local Authority
3. Person importing goods
4. Any other person as notified by the Government.

TCS Payment & Return

• TCS collected needs to be paid within 7 days of the next month.
• Every tax collector shall submit quarterly TCS returns i.e., Form 27EQ in respect of the tax collected by him in a particular quarter.
• The due date of quarterly return is as under:

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Matching of TCS on Purchases

• TCS will also be collected on purchases by the respective seller.
• Such TCS will be reflected in Form 26AS for the year on the filing of TCS return by the seller.
• Matching of TCS collected on purchases needs to be made with TCS reflected in Form 26AS. In the case of difference, need to take follow up with the seller.

Related Posts

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Clarification on TCS on sale of goods

FAQs on TCS - Section 206C(1H)

Section 194LC – Income by way of Interest from Indian Company

TCS ON SALE OF GOODS – NEW PROVISION

TDS 194Q vs. TCS 206C(1H)

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CA Abhishek Doshi

He is a fellow member of ICAI and commerce graduate. He is partner at K S D & Associates having offices at Rajkot – Gandhidham – Ahmedabad and has been in the practice since 2008, mainly engaged in the practice of GST (earlier Service Tax & VAT), Income Tax, Finance and Audit. He is regularly appearing before the adjudication and appellate authorities including CESTAT(Tribunals) for GST / service tax matters. He has delivered lectures on the topic of GST and service tax at seminars organised by branches of ICAI, trade bodies, various associations, and Service Tax Department. He is also a regular attendee of various Study Courses on Service Tax and GST conducted by BCAS, CTC, ICAI and other forums as Group Leader and Coordinator. He has been chairman of Rajkot Branch of WIRC of ICAI in the year 2014 and the branch has been awarded best branch award in the large branch category for the first time. He is member of Study Group on Indirect Taxes (Gujarat) formed by ICAI. He is also one of the empanelled faculty for GST by ICAI. He has also been associated as Mentor with GST World, a nationwide group of indirect tax professionals that aims at providing a comprehensive consultancy and litigation services for Goods and Services Tax to various corporates.

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Disclaimer: The above content is for general info purpose only and does not constitute professional advice. The author/ website will not be liable for any inaccurate / incomplete information and any reliance you place on the content is strictly at your risk.

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