Section 206C(1H)- TCS ON RECEIPT OF CONSIDERATION FOR SALE OF GOODS

 

COLLECTION OF TAX (TCS) ON RECEIPT OF CONSIDERATION FOR SALE OF GOODS

[ Section 206C(1H) of Income Tax Act, 1961]

The Finance Act, 2020, amended the section 206C of Income Tax Act, 1961 to insert sub section (1H) for collection of tax by seller at the time of payment to buyer of the purchase of goods provided certain conditions are satisfied. This provision is applicable w.e.f. October 1, 2020.

Who is liable to Collect Tax (TCS) under Section 206C(1H)?

(Total Sale or Gross receipts or turnover) of Seller > Rs. 10 crores in financial year Immediately preceding the financial year in which sale of goods were carried out.

For example: if seller of goods is having turnover more than 10 crores in financial year 2020-2021, he shall be liable to collect TCS from buyer on receipt of consideration on sale of goods in financial year 2021-2022.

When TCS under Section 206C(1H) should be collected?

W.e.f. October 1, 2020, provisions of Section 206C(1H) is applicable.

 

TCS is required to be collected by seller

-        at the time of receipt of consideration

-        for sale of goods of value or aggregate of value

-        in excess of Rs. 50 Lakhs in a financial year

-        from buyer of such goods

 

What is excluded from Rs. 50 Lakhs?

For the purpose of section 260C(1H), following are excluded:

1)     any amount received as consideration against sale of any goods being exported out of India

2)     consideration on sale of following items which are mentioned in Section 206(1)

(i)	Alcoholic Liquor for human consumption
(ii)	Tendu leaves
(iii)	Timber obtained under a forest lease
(iv)	Timber obtained by any mode other than under a forest lease
(v)	Any other forest produce not being timber or tendu leaves
(vi)	Scrap
(vii)	Minerals, being coal or lignite or iron ore

 

3)     consideration for sale of a motor vehicle

4)     Receipts by Authorised Dealer of amount for remittance out of India or seller of an overseas tour program package

 

** However, for financial year 2020-2021, for the purpose of calculation of threshold limit of Rs 50 Lakhs receipts of consideration on sale of goods,  receipts on sale has to be considered from April 01, 2020 though TCS u/s 206C(1H) is applicable w.e.f. October 1, 2020.

 

Who is Buyer under Section 206C(1H)?

 

Buyer means a person who purchases any goods, but it 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; or

c)        a person importing goods into India or any other notified person;

What is rate of TCS?

Particulars	Rate of TCS
Where PAN or Aadhar is furnished by Buyer	0.1%
Otherwise (Where PAN or Aadhar is not furnished by Buyer)	1.0%

 

When TCS is required to be deposited in Government Account?

TCS under this section shall be deposited with government by 7th day of subsequent month.

Due Date for Filing of TCS Returns

Quarter	Due Date for filing TCS return in Form 27EQ
April to June	15th July
July to September	15th October
October to December	15th January
January to March	15th May

Penalty for Delay in Filing of TCS Return beyond Due Date

Delay in filing of TCS return beyond due date shall attract Rs. 200 per day late fee.

https://www.linkedin.com/posts/krishna-kr-neeraj-48563b17_incometax-tds-knaca-activity-6811557847374028800-LoNL