TCS on Sale of Goods under Income Tax Laws with effect from 01.10.2020

What is Tax collected at source (TCS)

TCS is the tax payable by a seller which he collects from the buyer at the time of sale.

Eligibility

• If sale of any type of goods above Rs. 50 lakhs; and
• Turnover is of Rs. 10 Crores and above during the FY 2019-20 and onwards

Effective from

1 October 2020

 Exemptions from TCS

• If the buyer is liable to deduct TDS or collect TCS under any other provision of the Act and has deducted/collected such amount on the goods purchased by him from the seller; or
• If the buyer is the Central/State Government, an embassy, a High Commission, legation, consulate, the trade representation of foreign state, local authority; or
• Any Person importing goods from any country to India or any class of person notified by the Central Government in the official gazette for the purpose subject to such condition as specified in that notification

Detailed Description

Every seller whose total turnover from the business carried on by him exceed ₹10 crores during the FY 2019-20 & onwards, who receives any amount as consideration for sale of any goods excluding exports of the value or aggregate of such value exceeding ₹50 lakhs in any previous year shall at the time of receipt of such amount collect a sum equal to 0.1% of the sale consideration exceeding ₹50lakhs as TCS from the buyer.

Key provisions

The above provision is applicable to all transactions including i.e. Inter-company sales transactions exceeding ₹50lakhs in the FY 2020-21. But the seller will be liable to collect TCS with effective from. 1^st October, 2020.

The assessee needs to check the applicability on year as well as specific to each buyer basis on PAN India not GSTIN basis.

The exemption from collection of tax is given only to those buyers who are liable to deduct tax at source under any other provision of this Act and has deducted such amount.

The goods mentioned below are not required to consider for the above said provision since the rate for collecting tax for such goods has been specifically mentioned:

• Alcoholic Liquor for human consumption
• Tenduleaves
• Timber obtained under a forest lease
• Timber obtained by any mode other than under a forest lease
• Any other forest produce not being timber or tendu leaves
• Scrap, Minerals, being coal or lignite or iron ore
• Motor vehicle
• Foreign remittance through Liberalised Remittance Scheme
• Selling of overseas tour package.