With a view to widening the tax net, the Indian government has extended the scope of Tax Collected at Source (“TCS”). The Government of India has added a new sub-section (1H) in section 206C which would be called section i.e 206C (1H) of the Income Tax Act, 1961 with regards to “Tax Collection at Source”. In this blog information on what is Section 206C (1H), and the applicability of TCS on the sale of goods will be explained in detail.
“Every person, being a seller, who receives any amount as consideration for the sale of any goods of the value or aggregate of such value exceeding 50 lakh rupees in any previous year, other than the goods being exported out of India or goods covered in sub-section (1) or sub-section (1F) or sub-section (1G) shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 0.1 percent of the sale consideration exceeding fifty lakh rupees as income-tax”.
That means, that Every seller who has received any amount as sale consideration above Rs. 50 lakhs (limit to calculate from 1st April, 2020) has to collect 0.075% of bill amount from such buyer, collect PAN and pay as TCS every month.
The new provisions added by subsection 1(H) of section 206C will be Applicable from the 1st of October, 2020.
Buyer means a person who purchases any goods, but does not include:
Seller means a person whose total sales, gross receipts, or turnover from the business carried on by him exceed Ten Crore rupees during the financial year immediately preceding the financial year in which the sale of goods (Sale of Services is not covered) 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.
Note: Sellers will need to add 0.075% to the total bill value and deposit with the government every month. This Tax Collected at Source rate would be 0.1% from 01.04.2021. So everyone is advised to complete accounting for half year till 30.09.2020 and separate parties with whom payment received crosses Rs. 50 lakhs.
Suggested Read: TDS rate chart for FY 2020-21
Seller is liable to deduct TCS from sales
No, because the Seller will not fulfil the application criteria of a previous financial year’s turnover of 10 crores.
TCS will not be collected on export sales made outside of India.
TCS (Tax Collected at Source) will only be collected when products are sold.
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Thanks for writing such Informative Article in simple Words.
it cleared many doubts.
Hello Hemant Patel,
Thank you for this write-up,
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Sir, Please clarify the amount of TCS u/s 206 CR in the following Scenario
Sale upto Dec'22 Rs. 50,00,000/-
Sale in Jan'23 Rs. 10,00,000/-
Sale in Feb'23 Rs. 20,00,000/-
Sale in Mar'23 Rs. 30,00,000/-
Collection upto Feb'23 Rs. 50,00,000/-
Collection in Mar'23 Rs. 20,00,000/-
So TCS u/s 206CR to be collected in Mar'23 @ 0.1% of 20,00,000 (Collection exceeding 50 Lakhs) = Rs. 2000
or @ 0.1% of Rs. 60,00,000 (Sale exceeding 50 Lakhs) = Rs. 6000
Please reply urgently.