TCS on sale of Goods: Some Tips

Mysore/Mysuru: With the Finance Act 2020, Tax Collection at Source (TCS) on sale of Goods has been introduced by the Government with effect from Oct. 1, 2020 under Section 206 C (1H) of the Income Tax Act, 1961. Following are the few tips for TCS:

i) Any seller whose business turnover during the FY 2019-20 exceeds Rs.10 crore shall  make TCS.

ii) The tax shall be collected at .1% on such RECEIPTS of sale consideration from a buyer where it exceeds Rs.50 lakh during the financial year. For the purpose of calculation of this threshold of Rs.50 lakh, the receipt from the beginning of the FY, that is from Apr. 1, 2020 shall be taken into account.

iii) TCS shall be applicable only on the amount received on or after Oct. 1, 2020.

iv) TCS shall be made on RECEIPT of SALE PROCEEDS, after sale is taken place, but not on the sale value.

v) Due to COVID-19 pandemic till Mar. 31, 2021, the TCS shall be collected at .075% on such RECEIPT OF PAYMENT.

vi) The TCS shall be remitted on or before 7th of subsequent month by selecting the payment code “6CR-TCS on sale of Goods.”

vii) The seller shall file Quarterly TDS statement in FORM 27EQ and issue FORM27D to the buyer from whom such collection of taxes has been made.

viii) The TCS shall be made including the GST and other taxes levied, if any.

ix) No adjustment of TCS on account of sale return or discount or indirect taxes including GST is allowed. 

x) Advance received from buyer shall also attract TCS.

xi) If the buyer does not provide PAN, TCS shall be made     at 1%.

xii) TCS shall not be made on receipt of sale proceeds from the Central Government, State Government or Local Authority.

xiii) Export of Goods has been exempted from the applicability of this TCS.

xiv) TCS is not an additional tax, it is in the nature of advance  Income-Tax like TDS for which the buyer would get the credit against tax liability.

For detailed information, one may refer to the provisions of the Income-Tax Act, 1961, the Income-Tax Rules, 1962, relevant circulars or notifications, according to a press release from N.D. Shreenivaas, Bhavani Associates, Mysuru.