Section 206C (1H):
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Legal Provision of Tax Collection at Source
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Commentary
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Every person, being a seller, who receives any amount as consideration for sale of any goods
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TCS to be collected under this provision on any goods (subject to exceptions below), sold for a consideration
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of the value or aggregate of such value exceeding fifty lakh rupees in any previous year,
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No TCS to be collected where the amount of sales is not exceeding ₹ 50,00,000 in a financial year from that buyer.
For this purpose inclusion of GST in the sales value is not clarified by the government, as per section 145B, sales include any tax, by whatever name called.
Therefore, it can be concluded that the value of sales must be considered inclusive of GST.
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other than the goods being exported out of India
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No TCS on Exported Goods
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or goods covered in sub-section (1) or sub-section (1F) or sub-section (1G) shall,
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Under these provisions, TCS is already there
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at the time of receipt of such amount, collect from the buyer,
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The Tax shall be collected at the time of receipt of consideration for the sale of Goods. No TCS is required to be collected while debiting the account of the debtor.
However, TCS shall also be collected on Advance receipts.
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a sum equal to 0.1 per cent of the sale consideration
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i.e. ₹ 1 on every ₹ 1,000 receipt. (however for 01/10/2020 to 31/03/2020 rate shall be considered as reduced by 25%, that shall be 0.075%)
The amount can be charged on the invoice itself or can be charged through issuing a Debit Note (Commercial Debit Note) at the time of receipt of Payment.
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exceeding fifty lakh rupees
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No TCS shall be collected upto the receipt of value w.r.t. sales of ₹ 50 Lakhs.
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as income-tax:
Provided that if the buyer has not provided the Permanent Account Number or the Aadhaar number to the seller, then the provisions of clause (ii) of sub-section (1) of section 206CC shall be read as if for the words "five per cent", the words "one per cent" had been substituted:
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The buyer is required to provide PAN (or Aadhar Number), otherwise, the TCS shall be collected at a higher rate of 1%. Also, such TCS shall not be reflected in Form 26AS of the buyer.
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Provided further that the provisions of this sub-section shall not apply, if the buyer is liable to deduct tax at source under any other provision of this Act on the goods purchased by him from the seller and has deducted such amount.
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Exclusion to avoid dual levy in certain cases.
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Explanation.-For the purposes of this sub-section,-
(a) "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;
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Exclusion is given where the buyer is
- A Government (Central or State), Local Authority
- an embassy, a High Commission, legation, commission, consulate, and the trade representation of a foreign State
- An Importer of Goods
- Any other person to be specified
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(b) "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 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.
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This subsection is applicable for the collection of TCS only when, his Turnover/gross receipt/sales exceeds
₹ 10 Crore (of Goods + Services) during the preceding Financial year.
However, the Central Government may specify a person to Collect TCS without considering the limit of ₹ 10 crore as provided above.
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Procedural Compliance:
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Seller needs to have Tax Deduction and Collection Account Number (“TAN”)
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-
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Tax so collected shall be deposit in the account of Central Government by the 7th day of subsequent month.
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Challan No. 281
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Quarterly statement is to be filed by 15th day of the month succeeding quarter ending as at 30th June, 30th September and 31st December.
Quarterly statement is to be filed by 15th day of May in subsequent financial year for quarter ending as at 31st March.
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Form 27EQ
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Seller shall issue a certificate to buyer within 15 days of filing of Quarterly Statement
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Form 27D
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Related Issue:
Issue 1: Whether GST to be Charged on the Amount of TCS being collected?
Answer: As per section 15 of the Central Goods and Services Tax Act, 2017, (reconstructed provision):-
The value of a supply of goods or services or both shall be the transaction value, The value of supply shall include any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier;
TCS is not a tax but a mode of interim levy and collection of Income Tax on the “Income” of the buyer. Therefore, GST is not to be levied on the TCS amount.
(Circular 76/50/2018-GST dt. 31/12/2018 can also be referred)
Issue 2: Where the sale of amount ₹ 90,00,000 has already been made by 30th September 2020 to a buyer, of which 50,00,000 is outstanding on 30th September 2020, at what amount TCS to be collected?
Answer:
Since the amount of sale has exceeded ₹ 50,00,000 during the FY 2020-21 provision of TCS shall get attracted.
No TCS is to be collected upto the Amount of receipt of ₹ 50,00,000.
Therefore, TCS shall be collected on ₹ 40,00,000
Since the charging event is “Receipt” of payment, it is of least importance that the sale had made before 1st October 2020 or after such date.
