TCS On Sale Of Goods

TCS on Sale Of Goods

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

According to Section 206C (1H), Seller of goods is required to collect tax at 0.1 % of the amount in excess Of Rs. Fifty lakhs from buyer.

  • “Seller” means a person whose turnover exceeds rupees ten crores during the financial year immediately preceding the financial year in which the sale of goods is carried out.
  • “Buyer” means a person who purchases any goods (i.e. any other goods not covered by other provisions of section 206C) from the seller and the value or aggregate value of goods during the previous year exceeds Rs 50 lakh.

TCS on Sale of Goods under section 206C (1H) is applicable form 1 October 2020.

There were a lot of queries and debates going on for calculating the threshold of rupees fifty lakhs, considering the same; CBDT has issued guidelines on 29th September 2020, for the calculation of threshold for FY 2020-21 and to determine the applicability of section 206C (1H). 

CBDT Guidelines Dated 29th September 2020

  • It is clarified that; provision of this sub-section should not apply to any sale consideration received before 1st October 2020.
  • Consequently, it would apply on all sale consideration (including advance received), on or after 1st October 2020, even if the sale was carried out before 1st October 2020.  
  • It is also clarified that, if a person being seller has already received fifty lakhs rupees or more up to 30th September 2020 from a buyer, then TCS under subsection (1H) of Section 206 shall apply on all receipt of sale consideration received on or after 1st October 2020.
  • In Case of sale of a motor vehicle of ten lakh rupees or less would be subject to TCS under section 206C (1H), if the receipt of sale consideration for such vehicles exceeds rupees fifty lakhs during the previous year.

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