TCS on GST

TCS on sale of Goods under section 206C(1H)

In case a buyer pays the seller both for  services and sale of goods, Seller who receives any amount as consideration for sale of any goods aggregating to Rs. 50 lakh or more in a financial year from a buyer, at the time of receipt of such amount is required to collect tax at source (TCS) at the rate of 0.1 per cent on the sale consideration exceeding Rs. 50 lakh as Income-tax.

If the buyer fails to provide PAN/Aadhar, TCS shall be collected at the rate of 1 per cent.

Applicability :

Every seller whose total sales, gross receipts or turnover from his business exceeds Rs. 10 crores in the immediately preceding financial year.

SPECIFIC EXCLUSION :

TCS on sale of goods under section 206C(1H) shall not apply :

• The Central Government, a State Government, an embassy, a High Commission, consulate and trade representative
• a local authority
• a person importing goods into India
• on export of goods
• Where buyer is required to withhold taxes and such buyer has done withholding of required amount.
• on goods that are specifically covered under sub section (1), (1F) or (1G) of section 206, i.e :
  • Alcoholic liquor for human consumption
  • Tendu leaves
  • Timber or any other forest produce
  • Scrap
  • Mineral, being coal, or lignite or iron ore
  • Motor vehicle
  • Overseas tour package

APPLICABILITY OF NON PROVISIONS:

It is clarified that TCS is not applicable in relation to below-mentioned transactions:

• in securities and commodities listed on recognized stock exchangesor cleared and settled by recognized clearing corporation;
• in case of transactions in electricity;
• in renewable energy certificatesand energy-saving certificates traded through registered power exchanges.

 DUE DATES :

The seller is also required to furnish the particulars of TCS collected and deposited with the government treasury in the form of a statement and also issue certificates to the customers on a periodic basis. The due date for filing the TCS statements are provided in the table below:      

 Important note on TCS rate and compliance till 31^st March 2021 (Covid-19 relief measures)

Government of India vide press release dated 13 May 2020 has announced reduction in TCS rates by 25 per cent of the existing rates. New reduced rates are applicable till 31 March 2021. Accordingly, lower rate of TCS at the rate of 0.075 per cent shall be applied instead of 0.1 per cent till 31 March 2021. There appears to be a typographical error in the press release which provide reduced rate of 0.75 per cent instead of 0.075 per cent.