Tax Need to be Collected on Sale of Goods
With effect from 1st October 2020 onward, now you have to Collect Tax from the buyer if he/she has purchased of Goods of value of more than Rs. 50.00 lacs from you.
In other words, if you have made Sales of Goods to any person of Value of more than Rs. 50.00 lacs then you need to collect tax from buyer U/s 206C(1H) of The Income Tax Act, 1961.
A. Basic Conditions:
- This section shall be applicable on Sales of Goods only not on the sales of Services. So if you are in Service Business then you need not be collected Tax.
- This section will be applicable only when, if you had made sales of Goods in last year i.e F.Y. 2019-20 more than Rs. 10.00 Crores. If your sales has remained less then Rs. 10.00 crores then you need not to collect tax.
- TCS to be collected if the Value/Aggregate Value received for Goods from a buyer is more than Rs. 50 Lakhs in a financial year.
- TCS shall be applicable on receipts basis.
B. Rate of TCS:
TCS to be collected on [ Total Sale Value received – Rs.50 Lakhs] @ Rate of 0.1%, if PAN of buyer is available [1% if PAN not Available].
Normally Rate of TCS is 0.1% of (Total Sale Value received – Rs.50 Lakhs) but rate of TCS shall be 0.075% up to 31-03-2021 due to Covid-19 relief.
C. Due Date of Filling TCS Return:
The tax collected during the month need to be deposited within seven days of next month.
Due dates of filing of Return and issuance of certificate of TCS is as:
|Quarter Ending on||Due date of submission of return||Due date for issuance of certificate of tax collected|
|30th June||15th July||30th July|
|30th September||15th October||30th Oct|
|31st December||15th January||30th Jan|
|31st March||15th May||30th May|
Suppose you have made Sales to a buyer as:
|1.||Sales up to 30-09-2020||Rs. 35 Lacs|
|2.||Amount received up to 30-09-2020||Rs. 25 Lacs|
|3.||Invoices raised from 01-10-2020||Rs. 30 Lacs|
So, you need not to collect tax on Receipts on Rs. 25 lacs because it is prior to 01-10-2020.
Now suppose you have received Amount of Rs. 30 lacs than you need to collect TCS as:
0.075% of Rs. 5 lacs (Rs. 25 lacs + Rs. 30 lacs – Rs. 50 lacs)
- TCS shall be on Receipts of Sales Consideration including GST.
- Receipts shall be computed from 01-04-2020 but TCS shall apply on all receipts on or after 01-10-2020
- TCS shall not be collected on Export Sales.
- Sales of Services shall also be count for determining the Limit of Rs. 10.00 Crores in preceding financial year