Direct Tax - TCS on Sale of Goods Section 206C(1H).pdf

Direct Tax - TCS on Sale of Goods Section 206C(1H)

1. TCS on sale of Goods
(Income-tax)
Overview and
Applicability

2. What is TCS?
•TaxCollectedatSource(TCS) isataxthat iscollected bythe
SELLERfromthe buyeranddepositedtothe government
•Tillnow,TCSis applicableonlyonsaleofspecified goods
such asAlcohol,tobacco,timberwood,motor vehiclesmore
than10lakhs, etc
•Recently,governmenthasexpandedTCStoevensaleof any
typeofgoods(subject tocertainconditions)–Section
206C(1H)ofIncome-taxAct, 1961
•In thenextfewslides,we havediscussedinbriefthe
conditionsandapplicabilityofthis newprovision

3. Applicability –Section 206C(1H)
•Thisprovisionisapplicablew.e.f.01October2020
•Totalsales/turnover/grossreceiptsofSELLERshallexceed
INR10croresduringprecedingFY,AND
•TCSshallbeapplicablewhereSELLERreceivesanyamount
asconsiderationofmorethanINR50lakhsfromaSINGLE
BUYERforsaleofANYGOODS
•Sellermaybeanyperson(viz.,Individual,company,etc)
•CollectabilityofTCSonsaleofgoodsarisesatthetimeof
RECEIPTof considerationfromthebuyerof goods

4. Rate of TCS
•TCSshallbecollected attherateof0.1%on amountin
excess ofINR50lakhs
•Wherethebuyerdoesnot havePAN,then the rateshallbe
1%
Note: Considering COVID-19 impact, the government has
reducedTDSratefor theperiod14-05-2020to31-03-2021to
0.075%
•TCSshallbeaddedtothe totalvalueofinvoice

5. TCS Compliances to be done
by Seller
•TCScollectedbythesellershallbepaidtotheaccountof
governmentbythe7
th
ofthenextmonthinwhichTCSis
collected
•QuarterlyfilingofTCSreturns(Form27EQ) asfollows:
Quarter DueDate
ApriltoJune 15
th
July
JulytoSeptember 15
th
October
October toDecember 15
th
January
JanuarytoMarch 15
th
May

6. Non applicability of TCS
TCSshallnotbeapplicableinthe followingcases:
•WhereturnoveroftheSelleris lessthanINR10croresinthe
precedingFY
•WheregoodsareexportedoutsideIndia
•WhereanyTDSprovisionisapplicableonsuch goods (viz.,
softwareCDincaseroyaltyis applicable)
•Wherebuyeris alocalauthority
•Wherethebuyeris CentralGovernment,StateGovernment,
Embassy, HighCommission,etc
•WhereSellerisdealinginspecifiedgoodsforwhichseparateTCS
provisionsareapplicable(viz.,Alcohol,Timberwood,Scrap,
Vehicles,etc)

7. Key Issues to be looked into
•Consideration ofAdvancereceiptsas TCSispayableon
receiptbasis
•Treatmentof salesreturns–whether tobeconsideredor
not
•Asprovisionsareapplicablefrom01October2020,what
aboutinvoicesraisedbeforesuchdateandconsideration
receivedaftersuchdate
•WhetherTCSis tobecalculatedinclusiveofGSTor
exclusiveofGST
•Internal ERPsystemtobe modified toalignwithTCS
provisions

8. HowcanSBChelp
OurValueproposition

9. How can we help
ADVISORY
•Understandthenatureofvarioustransactionsfor
applicabilityofTCS(viz.,debit/creditnotes,incentives,
discounts,etc)
•Reviewdocumentsandtime totimediscussions withthe
Company
•AnalyzeTCSprovisionsandsuggestthepositiontobe
taken
•AssistingERPteamofthe Companytointegratethe TCS
provisions
COMPLIANCES
•AssistingincalculatingmonthlyTCSliabilityforpayment
•AssistinginquarterlyfilingofTCSreturns(Form27EQ)

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