TCS on Sale of Goods Section 206C(1H)- Income Tax Act, 1961

♦ Introduction to Section:

-Section 206C of the Income Tax Act provides for the collection of Tax at Source (TCS).

–TCS is collect on specified goods like Alcoholic Liquor for human consumption, tendu leaves, scrap etc.

-In order to widen and deepen the tax, a two new sub-section (1H) is inserted with effect from 1.10.2020.

♦ Who has to collect TCS:

• Under section 206C(1H) seller is liable to collect tax at source from buyer.
• “Seller” for this purpose means whose turnover exceeds Rs 10 crore during the financial year immediately preceding the financial year in which the sale of sale of goods is carried out.
• “Buyer” means a person who purchase any goods (i.e. any other goods not covered by other provisions of section 206C) from seller and value or aggregate value of goods during previous year exceeds Rs 50 lakh.

♦ When to collect TCS:

• Seller receives any amount as consideration for sale of any goods of the value exceeding Rs 50 lakh from any single buyer.
• TCS has to be collected at the time of received of such amount i.e. on RECEIPT BASIS.
• Sale made to buyers upto 30^thSeptember, 2020 shall not be liable to collect the TCS.

♦ Non Applicability of the section:

• Where the turnover of the seller is less than 10crore in the preceding Financial Year.
• Where goods are exported out of India.
• Where any TDS provision is applicable to such goods.
• Where the buyer is the Central Government, State Government, Embassy, A high Commission, Legation or trade representation of foreign state.
• Where the buyer is a local authority as per explanation to section 10(20).
• Where the seller is dealing with the following goods:

♦ Rate of TCS:

• TCS shall be collected @0.1% of the amount in excess of Rs 50 lakh.
• If buyer does not provide the PAN , TCS shall be deducted @1%.
• NOTE:(TCS rate has been reduced to 0.075% from 1^st October, 2020 to 31^st March 2021).

♦ Due date to deposit TCS:

• The TCS collected by the seller shall be paid to the account of the Government by the 7^thof the next month.
• ♦ Illustrations: