TCS (Tax Collected at Source)

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.

Who is supposed to collect TCS under section 206C (1H)?

As is the case with all TCS transactions, theseller of goodshas been entrusted with the responsibility to collect TCS. However, only those sellers, whose gross turnover or receipts from the business for the immediately preceding Financial Year exceeds Rs. 10 Crores shall be liable for the collection of TCS. Such limit shall have to be checked every year.

From whom such TCS is to be collected?

TCS is to be collected only from those buyers from whom, sale consideration received during the FY exceeds Rs. 50 lakhs. This condition needs to be evaluated separately for each buyer and the amount needs to be evaluated separately every year. It is important to note here that the trigger point for collection of TCS is receipts and not sales. Hence, in case consideration is received for sales, made over a number of years, TCS shall still be applicable even if the annual sale does not exceed Rs. 50 lakhs. Also, CBDT needs to clarify whether receipts against sales made prior to 1st Oct 2020, shall also be subject to TCS. As a prudent measure, the same shall be subjected to TCS, unless a contrary clarification is received. Another thing to note is that this section is applicable on sale of goods only and services have presently been kept out of the ambit of the section.

What is the amount on which TCS is to be collected?

One of the most important distinctions of this section from other TDS/TCS provisions is its applicability solely based on a receipt and not sales. Hence, the amount of receipt post 30th Sep 2020 shall determine the applicability of this section. Only if the seller has received an amount above Rs. 50 lakhs from a buyer on or after 1st Oct 2020, during the same Financial Year, then these provisions shall be attracted.

Important: Please note that the information on this page / site is provided as general information for better understanding for the user and does not constitute tax, legal, or other professional advice and must not be used as such. Please consult your professional adviser(s) if you have any questions / doubts regarding the above.


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