Tax Collected at Source (TCS) on Goods
Finance Act 2020 introduced a new provision under Section 206C (1H) for the Tax Collected at Source (TCS) on Goods With effect from 1st of October 2020.
Highlights are as under.
- Sub section 1H under Section 206C is applicable from 01.10.2020.
- Applicable to every person whose total sales, gross receipt or turnover is more than ? 10 Cr during the preceding Financial Year
- TCS is to be collected @ 0.1% on the amount exceeding Rs.50L during the financial year in respect of sale of goods made to a buyer – GST Registered buyer
- TCS is to be collected @ 1.0% on the amount exceeding Rs.50L during the financial year in respect of sale of goods made to a buyer – Un-registered buyer (non PAN / Aadhaar)
- For the period from 01.10.2020 to 31.03.2021 TCS rate will be 0.075%.
Seller: Seller means a person whose total sales, gross receipts or turnover from the business carried on by him exceed Ten Crore rupees during the financial year immediately preceding the financial year in which the sale of goods (Sale of Services is not covered) is carried out, not being a person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.
Buyer: Buyer means a person who purchases any goods, but does not include,—
(A) the Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or
(B) a local authority as defined in the Explanation to clause (20) of section 10; or
(C) a person importing goods into India or any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein;
Goods: However the Goods have not been defined in the Income Tax Act, hence we have to borrow the reference from other acts related to Goods like Sales of Goods Act, 1930 or Goods and Service Tax Act 2017. In the both Acts the Term “Goods” has been defined as “Goods” means every kind of movable property other than money and securities but includes actionable claims, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply .
So if any person deals in the goods covered under the above definition then he shall be liable to Collect TCS under the newly inserted provisions.
However, Seller is not required to Collect TCS on all the Types of sales under Section 206C(1H), there are some exceptions give to this provision, these are listed below:
– If the Goods are Exported out of India
– If the goods are of such type on which TDS is liable to be deducted by the buyer (Like in case of Job Work, Composite Supply).
– If the Seller is liable to collect the TCS under any other clause of Section 206C. (Like in case of Motor Vehicle dealer he shall collect the TCS on the motor vehicles if the value of the vehicle exceeds Rs. 10 Lac)
Note:-
1. Till the limit of Rs. 50 Lac there is no requirement to Collect TCS by the Seller however the moment purchases of the buyer exceeds Rs. 50 Lac from the same seller then on such excess amount seller shall collect the TCS. However, in the First year of implementation of this new provision Sale made to buyers up to 30th September 2020 shall not be liable to collect the TCS.
GAGAN CHOUDHARY
CFO Consultant
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