The government of India has introduced Section 206C(1H) of the Income Tax Act, 1961 with regards to Tax Collection at Source on sale of any other goods. Applicable to all sellers of goods whose turnover for the preceding Financial Year exceeds INR 10 crores w.e.f. 01.10.2020. This provision is not applicable where other TCS & TDS provisions is applicable.
Key points to be noted:
- Every seller who has received any amount as consideration on sale of any other goods above INR 50 lakhs are liable to collect an additional 0.1% of the bill amount, collect PAN and pay/deposit such amount as TCS every month.
- Even though the TCS amount is debited to the buyer, the liability does not arise until the time the amount is collected/received.
- TCS returns have to be filed like TDS returns and compliances like issuance of certificate etc. are to be followed.
Action point:
- We advise all assessees to complete accounting for half-year till 30.09.2020 and separate parties with whom sale of INR 50 lakhs are made.
- From every sale after 01.10.2020 to such parties, the assessee would be liable to levy 0.1% TCS in every bill and keep record of the same, as tax is payable at the time of receipt from such sale.
- Accordingly, sellers will need to add 0.1% to the bill value and deposit with the government on receipt of the payment from buyers.
Flow Chart of TCS applicability:
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