Introduction TCS The supplier of goods collects an additional amount from buyer of goods over and above the sale consideration Not applicable to services Section 206C Existing Provisions Existing TCS on Sale of Certain Goods applicable on sale of ID: 1027190
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1. TCS on Sale of GoodsByCMA S VENKANNA
2. IntroductionTCSThe supplier of goods collects an additional amount from buyer of goods over and above the sale consideration.Not applicable to servicesSection 206C Existing ProvisionsExisting TCS on Sale of Certain Goods – applicable on sale ofLiquorTendu leavesTimber/Forest ProduceScrapParking lotToll plazaMinerals (Coal, lignite, iron ore)Hence the new provisions is not applicable to the above goods.
3. Section 206CSummarySub Section (1)Existing Provision on sale of certain productsSub Section (1C)TCS on Parking Lot, Toll Plaza, Mining and QuarryingSub Section (1F)TCS on sale of motor vehiclesSub Section (1G)Relating Authorized Forex Dealer under FEMAThe New ProvisionSub Section (1H)TCS on All goods except the above
4. Sec.206C(1H) - ApplicabilitySection 206C(1H) widen the scope of Section 206CTCS on Sale of all GoodsW.e.f. from 1st October 2020Collect tax on sale of goods in addition to sale considerationRate of TCS = 0.1% At present due to corona the rate is reduced to 0.075% up to 31st March 2021If the buyer does not produce PAN or Aadhaar, the TCS rate is 1%
5. ConditionsThe Turnover in the Previous Financial Year is more than Rs.10 crores(upto 31st March 2020)Turnover for this purpose includes GST Charged on SupplyThis year TCS is applicableWhen a Seller RECEIVES more than Rs.50 lakhs from BuyerTCS Applicable only on the amount in excess of Rs.50 lakhsIf the Turnover is less than Rs.10 crores in the previous – TCS provision is not applicable.No TCS for the Payments received before 30th September 2020
6. Calculating TurnoverWhile calculating the threshold of Rs.10 Crore, the TOTAL TURNOVER including gross receipts and sales is to be taken into consideration. Also, the Sale of Service shall also be taken into consideration while calculating the Limit of 10 Crore. Whereas for computing the threshold of Rs.50 Lakhs, ONLY SALE OF GOODS is to be considered. GST Component is to be included while calculating the Sales Consideration.
7. IssuesTurnover for this purpose is inclusive of GST The Threshold limit of Rs.50 lakhs is applicable only to each buyer separately. If Advance is received after 1.10.2020 for future supply, TCS is applicable.The Threshold Limit of Rs.50 lakhs should be calculated for the whole year from 1st April 2020 to 31st March 2021Received Rs.1.00 crore before 1.10.2020. Receives Rs.10 lakhs after 1.10.2020. Total Received Rs.1.10 crores. TCS on Rs.10 lakhs only.Not on Rs.60 lakhs (1.10 – 50)
8. Example - ApplicabilityParticularsAmount (Rs.in Crores)Sale of Goods5.00Sale of Services4.00Total Turnover for 2019-209.00AddGST at 18%1.62Total10.62The Turnover Exceeds Rs.10 Crores, the new provision TCS applicable from 1.10.2020
9. Example - Threshold LimitAmount collected from 1.4.20 to 30.9.20Amount collected from 1.10.20 to 31.3.21TCS onRs.35 lakhsRs.25 lakhsRs.10 lakhs (35+25=60-50)Rs.60 lakhsRs.15 lakhsRs.15 lakhs (The limit crossed before 30.9.20)Rs.25 lakhsRs.15 lakhsNo TCS
10. How to calculate TCSParticularsAmount (Rs.)Value of Goods (in excess of Rs.50 lakhs)2500000Add: GST at 28%700000Total3200000TCS at 0.075%2400Invoice Value3202400
11. ExemptionsSale does not include the followingSale to Central GovernmentSale to State GovernmentSale to local authoritiesSale of goods to High Commission, EmbassyExport of GoodsOnly of export of goods outside India is excludedDeemed Exports: Sale to SEZ and EOU – TCS ApplicableSale of Services in India or export of servicesNo TCS on the importer of GoodsNote: Includes Government Entities and Corporations
12. Legal IssuesDefinition of Goods – As per Sale of Goods Act 1930Includes all movable articles except actionable claim and moneyBut includes shares and stocks.Definition of ConsiderationTCS on Gross Amount Received Includes GSTIncludes Freight, InsuranceAny other charges
13. ProcedureDeposit of TCSWithin 7 days of the next monthQuarterly StatementThe seller required furnish Quarterly State in FORM 27EQDues Dates:Quarter ending 30th June 15th JulyQuarter ending 30th September 15th OctoberQuarter ending 31st December 15th JanuaryQuarter ending 31st March 15th May Late Fee: Rs.200 per day (Maxim : Amount of TCS) (Sec.234E)Issue of TCS Certificate to the buyerForm 27D – Due Date: 30th July, 30th October, 30th January, 30th May for respective quarters.
14. Other IssuesAutomobile SectorTCS is applicable to automobiles sector for selling of a Motor vehicle above Rs. 10 lakhs to the customer but it is not applicable from the manufacturer to the distributor, dealer or sub-dealer The new provision of TCS is applicable to automobile sector also.Manufacturer, Distributor, Dealer, or Sub DealerSec.206C(1F) applicable only to B2C TransactionsSec.206C(1H) is applicable to B2B Transactions
15. Not Applicableif the buyer is liable to deduct tax at source under any other provision of this Act on the goods purchased by him from the seller and has deducted such amount.The two noteworthy conditions are-1. The buyer is liable to deduct TDS, and2. The buyer has actually deducted the TDS.Both conditions are required to be satisfied.In the case of works contract, both the goods and services are involved. However, such a transaction is covered under section 194C and is subject to TDS thereunder. Hence, there shall not be any TCS on works contract only if the buyer has deducted the tax.
16. ReceivablesCBDT should come out with a clarification on applicability of TCS on Trade Receivables outstanding as on 30th September 2020 and received on or after 1-10-2020.In case of collection of consideration for trade receivables as on 30.09.2020 (prior to 01.10.2020), the seller has to raise debit notes immediately on receipt of consideration of more than Rs. 50 Lakh. In this case, if the seller receives the consideration, say on 30.10.2020, he has to deposit the amount of TCS by 7th November, 2020 even if the buyer does not pay the amount of TCS to the seller.
17. Sales ReturnsIn case of sales return, credit or debit note may be issued which will ultimately reduce the amount receivable by the seller from the buyer. TCS shall be collected on the net amount collected from the buyer. If the sales return happens after the receipt of consideration and furnishing of TCS statement, the only option left to the seller is to file a correction statement and adjust the same with any subsequent TCS liability or claim refund of the TCS.
18. MiscellaneousBranch TransfersStock Transfer is not sale of goods. Hence TCS not applicableJob Work or Works ContractSince the Job Work is covered under the provisions of Sec.194CContractors/Sub ContractorsTDS is applicable.Hence TCS is not applicable
19. Sale of Immovable PropertiesImmovable properties Viz., land, buildings and flatsThey are not goods – hence TCS not applicableJewellaryThey are goods – TCS applicableTDR/Lease – Relating to Immovable Propeties – TCS Not applicableSlump Sale – TCS is not applicable
20. Delayed Payment by Customers Interest ChargedReference: Section 15(2)(d) of CGST ActTransaction ValueValue of supply includes interest or late fee or penalty for delayed payment of any consideration for the supply.Hence TCS is applicable on the above payments received from the customer
21. Shares and StocksListed SharesSold through recognized Stock Exchanges - NO TCSSold through off-market – TCS applicable subject to threshold limitUnlisted SharesTCS is applicable subject to the threshold limitApplicable only if the Seller is a Trader in dealing with Shares.
22. Bill Discounting by SellersThe transaction is a financial arrangement by the Seller from BankWhen the Bills are discounted with the Bank, the seller receives the amount which is in the form loan.Hence TCS is not applicable in this regard.
23. Accounting for TCSInclude TCS in the InvoiceIssue Debit Note at the time of collection of Debtors from the Customer for the amount of TCS.Liability is created for TCS by crediting, if it is included in invoiceTCS is credited when subsequently received at the time of collection of Debtors (if it was not included in the invoice)
24. New Companies New company / new business is started/commenced during the year 2020-21Criteria of Rs.10 in the previous year is not satisfied in this caseHence TCS is not applicable for the entity for the year 2020-21.
25. Bad Debts RecoveredIf it is an account of sale of goods earlierThe relation of Seller and Buyer persists.TCS is applicable
26. BarterIf the consideration is adjusted through accounting entriesResults in receipt of lesser amountBut there is no clarification by CBDTOn a safer side, if the sale of goods exceeds the threshold limit, TCS may be recovered in either of the case, i.e. the Buyer and SellerThe Receipt is treated as deemed receipt for both the seller and buyer
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