Here we will go through all the latest tax collected at source (TCS) provisions as listed by the tax department. The department has made clear all the points in detail. The Finance Act 2020 has launched three new provisions under Tax collected at source 
The Central Board of Direct Taxes (CBDT) has amended the provision of Income Tax Rules A simple way to understand all major changes under rebates and deductions. Read more. All new TCS provisions have been applicable from October 1, 2020.
TCS on Foreign Remittance Through LRS
The individual liable to manage
- Any approved merchant (“AD”) as specified under FEMA
When the tax should be collected
- AD obtains an amount or a total of the value of INR 700,000 or higher in a fiscal year
From whom the tax should be raised
- From a customer of the overseas currency sent out of India below the LRS
Price of Collection
- Rate of the collection is 5%
- In no PAN or Aadhaar case rate shall be 10%
Non Applicability in the following Cases
- If the customer is liable to subtract TDS
- If a client is a Government, ministry or high commission
TCS on Wholesaling Overseas Tour Packages
An individual liable to accumulate
- Trader of abroad travel packages and involves costs for travel, hotel visit or boarding or similar interests.
When the tax should be raised
- No financial deadline defined, the tax should be obtained irrespective of the cost
From whom this tax should be solicited
- From any person who buys such package
Charge of Collection
- Rate of the collection is 5%
- In no PAN or Aadhaar case rate will be 10%
TCS on the Selling of Any Goods(1/3)
The person responsible to collect
A dealer whose turnover surpasses INR 10 Crores in the directly preceding financial year
When the tax should be collected
At sales time the product other than tendu leaves, timber, scrape, toll ticket, cars or goods responsible to TDS
From whom the tax should be collected
Value or aggregate amount of compensation received surpasses INR 50 lacs through.
Rate of Collection
- Percentage of the collection is 0.1%
- In no PAN or Aadhaar case rate will be 1%
Non Applicability in the below Cases
- If the consumer is likely to subtract TDS
- If a buyer is Government, ministry or high
TCS on the Selling of Any Goods (2/2)
TCS on the Selling of Any Goods (3/3)
One has tried to address the practical aspects to initiate the provisions through the FAQ:
Q.1 – How to collect tax from the buyer?
The invoice includes the amount of TCS that the seller needs to raise. But until the amount gets collected there is no concession arises on the collection of the amount.
Q.2 – How to conclude the applicability of these prerequisites?
The law cannot make important to the Act continuously when the seller is required to follow that means the applicability has to be laid on a year to year foundation.
Q.3 – Is TCS applied to the sale of the property?
Trade of property is narrated distinctively beneath the procurement of section 194IA for a value exceeding INR 50 Lakhs.
Q.4 – Whether TCS should be refunded in case of sales returns?
No, simply initial sales amount has to be returned as the amount of TCS would have been credited as prepaid taxes and will appear in form 26AS of the customer. Though the amount should not be settled or net settlement has to be done after settlement of return then on before-mentioned net remuneration TCS will be collected.
Q.5 – Whether the consideration will include the amount collected towards GST?
The term plan has not defined. Under the section 145A irrespective of the practice in books of accounts, the number of sales will be including GST.
TCS Payment and Return
- The TCS collection required to be paid for the next month in 7 days
- The quarterly TCS return has to be submitted i.e Form 27EQ
Get to know all about the return forms under TDS i.e. 24Q, 26Q, 27Q, 27EQ along with the due dates. Also, we mentioned the penalty norms and steps to download TDS forms. Read more with concern for the tax collected by him - The due date of tax in a quarter is divided
Get to know all about the return forms under TDS i.e. 24Q, 26Q, 27Q, 27EQ along with the due dates. Also, we mentioned the penalty norms and steps to download TDS forms. Read more| Quater | Due Date |
|---|---|
| April-June | 5th July |
| July-September | 15th October |
| October-December | 15th January |
| January-March | 15th May |
Way Forward & Scope Forward
Way forward
We shall assist in determining the applicability of the above provision, depending on the nature of business and each business transaction. The value on which the tax has to be obtained and the amount of payment for all the transactions.
Scope Forward
An illustration of the global pandemic COVID – 19, We should not reflect the present improved rates as the government recommended. Although for the purpose of finishing the rates has been diminished in comparison to sales of goods the reduction is about 0.075% for a buyer who has PAN/Aadhaar for the present financial year.
Is it TCS is applicable for repair and maintenance on repairing the motor vehicle. As of now, we are having the only TDS for repairing the motor vehicle under warranty. So going forward from October is it TCS is also applicable for repairing the motor vehicle under warranty
As per section 206c(1h) is applicable on the sale of goods so please check whether repairing of a motor vehicle is covered under goods definition or not
IN CASE OF TCS ON SALES AND PURCHASE OF GOODS,
WHICH IS APPLICABLE FROM 1.10.2020, ARE EXEMPT GOODS ARE ALSO INCLUDED? FOR E.G. SALE OF MILK IF EXCEEDS 50 LAKHS TO ONE PARTY.
“AS PER SEC 206C(1H) TCS WILL BE APPLICABLE IF YOUR SALE OF GOODS (OTHER THAN GOODS COVERED IN SUBSECTION 1 OR SUB SECTION 1F OR SUB SECTION 1G) FROM A PARTY EXCEED RS 50 LAC”
What about import and export transactions? Are they liable for TCS?
As per sec 206c (1h) TCS will be applicable if your sale of goods (other than goods covered in subsection 1 or subsection 1f or sub-section 1g) from a party exceeds Rs 50 lac
Thanks for sharing important information. My question is that sir I have some transactions that already exceed Rs.50 Lakh. So on 01/10/2020, I have to collect on those transactions also. e.g. Sales up to Sept20 Rs.65 Lakhs Now I raised the bill of Rs.5 Lakh so TCS Will be applied to on Rs.5 Lakh or Rs.5 + Rs.15 (Rs.65- Rs.15)
If the Sales of goods exceed 50 lacs DURING A F.Y. and consideration exceeds 50 lacs DURING A F.Y., then on the excess of 50 lacs TCS will be applicable.
Therefore, Sales = 65+5 = 70 lacs
Therefore TCS is applicable. However, the provision would come into effect from 1/10/20, and therefore amount in excess of 50 lacs received after 1/10/20 is only eligible for TCS.
In the present case, TCS is collectible only on 5Lacs.
Hope it helps!
Provision of Section 206C(1H) states that the seller has to collect TCS if sells goods exceeds Rs. 50 lakhs or more either in single transaction of in aggregate during the financial year 2020-2021
As per sec 206c(1h) TCS will be applicable if your sale of goods from a party exceeds Rs 50 lac. There is no need to collect TCS on the first 50 lac. Above rs 50 lac TCS will be applicable, so TCS would be applied on Rs 15 lac
TCS on sales of goods – TCS is to be collected on a receipt basis. I would like to know whether TCS is to be collected on the Outstanding amount showing in books (bills raised before Oct. 2020) and payment received after oct. 2020
TCS to be applied on the taxable value of goods and services including GST, at the applicable tax rate on the date of issuing the commercial invoice.
1. sales return after issuing of invoice – TCS should not be reversed, the only customer to apply for return along with annual returns.
2. Only TDS is applicable either on an invoice or while collecting depending upon the nature of transactions under which section it is covered.
Regards
trradhakrishnan