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Section 206C - TCS on Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc - Income Tax - Ready Reckoner - Income TaxExtract TCS on Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc - Section 206C Section 206C(1) : Profit and Gains from Business of trading in alcoholic liquor, forest produce, scrap, etc. Every person, being a seller shall at the time of debiting the amount payable by the buyer to the account of the buyer, or at the time of receipt of such amount from the said buyer, whichever is earlier, collect from the buyer, a sum equal to the following percentage of the purchase price, as income-tax. S.No Nature of goods Percentage rate of tax collection at source of Purchase Price 1. Alcoholic liquor for human consumption 1% 2. Tendu Leaves 5% 3. Timber obtained under a forest lease 2.5% 4. Timber obtained by any mode other than under a forest lease 2.5% 5. Any other forest produce not being timber or tendu leaves 2.5% 6. Scrap 1% 7. Mineral being coal or Lignite or Iron Ore 1% No surcharge, education cess or or SHEC shall be added to the above rates. Hence tax will be collected at source at the basic rate. Meaning of scrap:- Scrap means waste or scrap from the manufacture or mechanical working of materials which is definitely not usable as such because of breakage, cutting up, wear and other reasons. Non-applicability of section 206C(1) Self declaration by buyer if relevant goods are purchased for manufacturing or producing any articles or things [ Section 206C(1A) Rule 37C ] No collection of tax shall be made in the case of a resident buyer, if such buyer furnishes to the person responsible for collecting tax, a declaration in writing in duplicate in the prescribed form ( Form No. 27C ) and verified in the prescribed manner to the effect that the goods referred to in column (2) of the aforesaid Table are to be utilised for the purposes of manufacturing, processing or producing articles or things, or for the purposes of generation of power and not for trading purposes. Declaration furnished u/s 206C(1A) to be delivered to the Principal Chief Commissioner [ Section 206C(1B) ] The person responsible for collecting tax under this section shall deliver or cause to be delivered to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner one copy of the declaration referred to in sub-section (1A) on or before the seventh day of the month next following the month in which the declaration is furnished to him. Every person, who grants a lease or a licence or enters into a contract or otherwise transfers for parking lot or toll plaza or mine or quarry Section 206C(1C) Any right or interest in any parking lot or toll plaza or mine or quarry to another person, other than a public sector company (herein after called as Licencee or Lessee ) for the use of such parking lot or toll plaza or mine or quarry for the purposes of business shall, at the time of debiting of the amount payable by the licencee or lessee to the account of the licencee or lessee or at the time of receipt of such amount from the licencee or lessee, whichever is earlier, collect from the licencee or lessee 2% of such amount as Income-Tax. SECTION 206C(1D):- [Omitted by FA, 2017,w.e.f. 1-4-2017 ] SECTION 206C(1E):- [Omitted by FA, 2017,w.e.f. 1-4-2017 ] TCS on sale of motor vehicle exceeding the value of ₹ 10,00,000 Section 206C(1F) Every person, being a seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding ₹10,00,000, shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 1% of the sale consideration as income-tax. Calrification relating to certain issues with respect to section 206C(1F). [ Circular No. 22/2016 dated 08.06.2016 ] TCS on remittance out of India and on overseas tour programme package Section 206C(1G) Person Responsible for collecting TCS : Every person, (a) being an authorised dealer, who receives an amount, for remittance out of India [Omitted by FA, 2023, w.e.f., 01-07-2023 ] from a buyer, being a person remitting such amount out of India [Omitted by FA, 2023, w.e.f., 01-07-2023 ] under the Liberalised Remittance Scheme of the Reserve Bank of India; (b) being a seller of an overseas tour programme package, who receives any amount from a buyer, being the person who purchases such package, Time for collecting TCS At the time of debiting the amount payable by the buyer or at the time of receipt of such amount from the said buyer, by any mode, whichever is earlier, collect from the buyer, a sum equal to 5% 20% [Substituted by FA, 2023, w.e.f., 01-07-2023 ] of such amount as income-tax: Rate of TCS That the sum to be collected by an authorised dealer from the buyer shall be equal to 5% of the amount or aggregate of the amounts in excess of ₹ 7,00,000 remitted by the buyer in a FY, where the amount being remitted is for a purpose other than purchase of overseas tour programme package and is for the purposes of education or medical treatment [Omitted by FA, 2023, w.e.f., 01-07-2023 ] However, that the authorised dealer shall collect a sum equal to 0.5% of the amount or aggregate of the amounts in excess of ₹ 7,00,000 remitted by the buyer in a financial year, if the amount being remitted out is a loan obtained from any financial institution as defined in section 80E, for the purpose of pursuing any education: Where no tax is to be collected at source: (a) The authorised dealer shall not collect the sum, if the amount or aggregate of the amounts being remitted by a buyer is less than ₹ 7,00,000 in a financial year and is for a purpose other than purchase of overseas tour programme package. and is for the purposes of education or medical treatment [Omitted by FA, 2023, w.e.f., 01-07-2023 ] (b) The authorised dealer shall not collect the sum on an amount in respect of which the sum has been collected by the seller. (c) The provisions of this sub-section shall not apply, if the buyer is, (i) liable to deduct tax at source under any other provision of this Act and has deducted such amount; (ii) the Central Government, a State Government, an embassy, a High Commission, a legation, a commission, a consulate, the trade representation of a foreign State, a local authority as defined in the Explanation of section 10(20) 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. Meaning of specified term (i) authorised dealer means a person authorised by the Reserve Bank of India under section 10(1) of the Foreign Exchange Management Act, 1999 to deal in foreign exchange or foreign security; (ii) overseas tour program package means any tour package which offers visit to a country or countries or territory or territories outside India and includes expenses for travel or hotel stay or boarding or lodging or any other expenditure of similar nature or in relation thereto. Important note Circular to remove difficulty in implementation of changes relating to Tax Collection at Source (TCS) on Liberalised Remittance Scheme (LRS) and on purchase of overseas tour program package. [ Circular No. 10/2023 dated 30/06.2023 ] The Central Government hereby notifies that the provisions of section 206C(1G) of the Act shall not apply to a person (being a buyer) who is a non-resident in terms of section 6 of the Act and who does not have a permanent establishment in India. [ Circular no. 99/2022 dated 17.08.2022 ] The Central Government hereby notifies that the provisions of section 206C(1G) shall not apply to an individual who is not a resident in India in terms of clause (1) and clause (1A) of section 6 of the Act, and who is visiting India. [ Circular no. 20/2022 dated 30.03.2022 ] Seller to collect TCS from consideration received from buyer Section 206C(1H) [ W.e.f. 01.10.2020 ] Person Responsible for collecting TCS Every person, being a seller, who receives any amount as consideration for sale of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year , other than the goods being exported out of India or goods covered in section 206C(1) /(1F) /(1G) shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 0.1% of the sale consideration exceeding ₹ 50,00,000/- as income-tax. If no PAN provided buyer if the buyer has not provided the Permanent Account Number or the Aadhaar number to the seller, then the provisions of section 206CC(1)(ii) shall be read as if for the words 5% , the words 1% had been substituted. Non-applicability of this sub-section 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. Meaning of Buyer and seller for this sub section (a) Buyer means a person who purchases any goods, but does not include , the Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or a local authority as defined in the Explanation to clause (20) of section 10; or 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. (b) Seller means a person whose total sales, gross receipts or turnover from the business carried on by him exceed ₹ 10 crore 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. Important Note it is clarified that the buyer and seller would still be liable to deduct/ collect tax as per the provisions of section 194Q and 206C (1H) of the Act, as the case may be. [ Circular No. 20/2021 dated 25.11.2021 ] Note: The buyer shall get credit of TCS collected by seller. No TCS has to be collected where: (i) Buyer is a public sector company (ii) Buyer is a Central Govt., State Govt. (iii) Buyer is a club (iv) Buyer is embassy, High commission, Consulate or trade representative of a foreign state. (v) Buyer buys the above goods for his personal consumption.
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