Section 206C(1H) of the Income Tax Act 1961 at a Glance

1.The provisions of this sections are applicable with effect from 1st October, 2020.

The section provides that in case of sale of goods of the value or aggregate of such value more than Rs 50 lakhs in any PY, (other than the goods being exported out of India or goods covered in 206C (1) or 206C(1F) or 206C(1G)] seller shall collect TCS from the buyer @0.1% of the sale consideration in excess of Rs 50 lakhs.

SPECIAL POINTS TO BE REMEMBERED

  1. If the buyer (collectee) does not furnish PAN or Aadhar the TCS rate shall be 1%.
  2. Since TCS is to be collected on the receipt amount, the section applies on all sale consideration including any advance amount received on or after 1st Oct 2020 irrespective of the fact that the sale was carried out before 1st Oct or not.
  3. The calculation of the amount of sales consideration for ascertaining the eligibility for collection of tax at source as regards to Rs 50 lakhs shall be computed from 1st April 2020.

NON-APPLICABILITY

  1. Sale of services as this section applies to sale of goods only.
  2. Any consideration for fuel supplied to non-resident airlines at airports in India.

EXPLANATION TO THE WORDS

  1. SELLER: A person whose Turnover or Gross Receipts from the business carried on by him more than Rs 10 Crore in last Previous year.
  2. BUYER: A person who purchases any goods, but does not include

(a) Central Govt, State Govt, embassy, High Commission, Legation, commission, consulate, trade representation of a foreign State, Local Authority

(b) A person importing goods into India or any other notified person.

EXAMPLES

  • Mr. Sham has Turnover Rs 20Cr in last PY. He Sold goods to Mr. Ram up to 30/09/20 worth Rs 40 Lakhs and Rs 20 Lakhs from 1/10/21 to 31/03/21.

TCS applicable on Rs 10 Lakhs @ 0.1% i.e., Rs 1000/-

  •  Mr. Sham has Turnover Rs 30Cr in last PY. He Sold goods to Ram Ltd. up to 30/09/20 worth Rs 46 Lakhs and Rs 25 Lakhs from 1/10/21 to 31/03/21.

TCS applicable on Rs 21 Lakhs @ 0.1% i.e., Rs 2100/-

  •  Mr. Ghanshyam has Turnover Rs 30Cr in last PY. He Sold goods to Punjab Govt up to 30/09/20 worth Rs 46 Lakhs and Rs 25 Lakhs from 1/10/21 to 31/03/21.

TCS not applicable as section does not apply to a buyer being state govt.

  •  Haryana Govt has Turnover Rs 30Cr in last PY. He Sold goods to Ram Ltd. upto 30/09/20 worth Rs18 Lakhs and Rs 85 Lakhs from 1/10/21 to 31/03/21.

TCS applicable on Rs 53 Lakhs @ 0.1% i.e., Rs 5300/-

  • Mr. Ramesh has Turnover Rs 10Cr in last PY. He Sold goods to Ram Ltd. up to 30/09/20 worth Rs 46 Lakhs and Rs 25 Lakhs from 1/10/21 to 31/03/21.

TCS NOT applicable as Turnover In last PY is not more than Rs 10 Crore.

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