Analysis on Section 206C(1H) TCS on Sale of Goods

Introduction to Section 206C(1H) of Income Tax Act:

Section 206C(1H) introduced the Finance Act 2020 for the purpose of TCS on the sale of goods under the Income Tax Act with effect from 1st October 2020.

Who Will Collect the TCS u/s 206C(1H) ?

As per the provision of section 206C(1H) of income tax the seller is required to collect tax from the buyer.

Conditions for Collect TCS:

The following conditions are need to satisfied for collect TCS

• A seller whose turnover is above Rs 10 crore is required to collect tax from the buyer
• The seller must receive the consideration more than Rs 50 lakh from one buyer during a financial year.

Rate of TCS:

• As per the provision of section 206C(1H) TCS rate is 0.1% on receipt of consideration of value exceeding Rs.50 lakh in a financial year from the buyer.
• If the buyer not submit PAN or Aadhar then TCS rate is 1% instead of 0.1%.

Point of Time for collect TCS:

Under this section TCS collected only at the time of receiving consideration in excess of Rs: 50,00,000.

Exceptions for Collection of TCS:

• TCS is not required to be deducted if the buyer is a Central/State Government, Embassy, High Commission, Legation, Consulate, Trade Representation of Foreign State or any local authority.
• This provision does not apply to the import of goods to India.
• Goods do not include exports and goods covered under section 206C(1)- TCS on sale of alcohol, tendu leaves, forest produce and scrap; 206C(1F)- TCS on sale of motor vehicles and 206C(1G)- TCS on foreign remittance.

Format of TCS invoice:

Suppose a supplier chooses to charge TCS in the invoice,

Value of goods = Rs.1,00,00,000
GST at 28% = Rs.18,00,000
Total = Rs.1,28,00,000
TCS on the total value = Rs.7,800
Total invoice value will be = Rs.1,28,07,800

Due date for payment of TCS:

Due Date of TCS Returns: