TCS to be collected by seller from 1st October 2020, only if turnover in the previous year exceeds Rs 10 crore

With effect from 01-10-2020, the Finance Act, 2020 inserted Sub-Section (1H) in Section 206C. This provision requires a seller to collect tax at source from the amount received as consideration for the sale of goods if it exceeds Rs. 50 lakhs in any previous year. To clarify certain doubts about the applicability of the provision and the computation of the threshold, the CBDT has issued Circular No. 17/2020, dated 29-09-2020.

Section 206C(1H) provides as follows:
“Every person, being a seller, who receives any amount as consideration for sale of any goods of the value or aggregate of such value exceeding fifty 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 per cent of the sale consideration exceeding fifty lakh rupees as income-tax”.

CBDT issues circular no 17/2020 dated 29-09-2020 clarifying TDS/TCS provisions which are applicable from 1st October,2020. TCS to be collected and paid on all payment received on or after 1st October ,2020 including amount of GST and also  sales made prior to 1st October,2020. The threshold of Rs50 lakhs is year based and hence payment received before 1st October,2020 are to be considered. However applicability shall be on payment received on or after 1st October, 2020. Compliance of this new provision is going to be a big challenge for all taxpayers whose sales in previous year has exceeded RS 10 crores. 

A seller would be required to collect tax at source (TCS) from 1st October 2020 only if his turnover exceeds Rs 10 crore in the last financial year. 

The Finance Act, 2020 has amended the provisions relating to TCS with effect from October 1, 2020 to provide that a seller of goods shall collect tax at the rate of 0.1 per cent (0.075 per cent up to March 31, 2021) if the receipt of sale consideration from a buyer exceeds Rs 50 lakh in the financial year.

The TCS shall be applicable only on the amount received on or after 1st October, 2020 and the export of goods has been exempted from the applicability of the provisions of TCS.

Click Here to Download Press Release on Clarification of Doubts on TCS

Compiled by :

CA IP Mukesh Mittal

B.Com., FCA

Insolvency Professional

Independent Director

Certified Concurrent Auditor 

9215536951, 9813340495

ca.mukeshmittal@gmail.com

https://camukeshmittal.blogspot.com

DISCLAIMER: The Author have taken utmost care while drafting the article but it may occur that certain error creeps in. This article is for academic purpose and should not be treated as a professional advice. The readers are advised to refer the relevant bill, act, circular or notification before making any judgment.