TCS ON SALE OF GOODS from 1st Oct 2020

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On 13 May 2020 Government of India has announced reduction in TCS rates by 25 per cent of the existing rates. New reduced rates are applicable till 31 March 2021. Accordingly, lower rate of TCS at the rate of 0.075 per cent shall be applied instead of 0.1 per cent till 31 March 2021.

Previous Rates before 13th May – 0.1 %
Current Rates – 0.075%

TCS is applicable on payment exceeding 50 Lakhs after 1.10.2020

Effective from 1st October 2020

We will understand this by example.

Point 1 – Whether Turnover of the Seller exceeds Rs 15 Crores in F.Y. ended 31.3.2020
Rate will be charged 0.075 %, Without pan 1% TCS will be charged.

Point 2 – If TDS or TCS is deducted by the Seller under any other provisions then no TCS will be applicable.

Brief overview of TCS on sale of goods – Section 206(1H) of the Income-tax Act, 1961
Seller who receives any amount as consideration for sale of any goods aggregating to 50 Lakh or more in a financial year from a buyer, at the time of receipt of such amount is required to collect tax at source at the rate 0.075 per cent on the sale consideration exceeding 50 Lakh as income-tax.

If buyer fails to provide PAN, TCS shall be collected at the rate of 1 per cent.

Every seller whose total sales, gross receipts or turnover from his business exceeds 10 Cr in the immediately preceding Financial Year.

************TCS on sale of goods under section 206(1H) shall not apply :

where buyer is required to withhold taxes and such buyer has done withholding of required amount.
on export of goods;
on goods that are specifically covered under sub-section (1), (1F) or (1G) of section 206, i.e.:
Alcoholic liquor for human consumption,
Tendu leaves,
Timber or any other forest produce,
Minerals, being coal, or lignite or iron ore,
Motor Vehicle,
Overseas tour package.

# TCS is not to be collected when the sale is made to the Central or State Government or Embassy/High-commission, Consulate or Trade Representative/Local Authority.
# TCS is also not applicable when sale is made to a person who is importing any goods into India.

Compliance requirement

Due date for payment of TCS collected:  7th of the following month for each month
Quarterly Statement: Due date to file the TCS return and issue certificate:

Quarter endedQuarterly statementTCS certificate
30 June15 July30 July
30 September15 October30 October
31 December15 January30 January
31 March15 May30 May

In Defination of Turnover weather Gst is inclusive or not. No clarification has been provided by CBDT in this regard.


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