Provisions regarding TCS applicable from 1st October, 2020

Mar 24, 2020 | CMA Arunava Chakraborty

Provisions regarding TCS (Tax Collected at Source) applicable from 1^st October 2020:

TCS is covered under Section 206(C) of the Income Tax Act 1961. TCS is a tax that is collected by a seller from its buyers for a transaction covered under TCS provision.

This article deals with the existing transactions and transactions added vide Finance Bill 2020.
Transactions added vide Finance Bill 2020 shall be applicable from 1^st October 2020.

(1) Existing Transactions under section 206 (C)

The following are existing transactions under section 206 (C) in which no changes are made vide Finance Bill 2020.

Type of Transactions	Rate
Liquor of alcoholic nature made for consumption by humans	1%
Timber wood under a forest leased	2.5%
Timber wood by any other mode than forest leased	2.5%
Tendu Leaves	5%
A forest produce other than Tendu leaves and timber	2.5%
Scrap	1%
Minerals like lignite, coal and iron ore	1%
Bullion that exceeds over Rs. 2 lakhs/ Jewellery that exceeds over Rs. 5 lakhs	1%
Purchase of Motor vehicle exceeding Rs. 10 Lakhs	1%
Parking lot, Toll Plaza and Mining and Quarrying	2%

(2) The new addition of transactions in section 206 (C)

Vide Finance Bill 2020 ('FB 2020'), The Government has widened the scope of Section 206 (C) by including the following transactions within the ambit of TCS provisions:

Overseas remittance of Rs 7 lacs or above in a Financial Year covered under Liberalised Remittance Scheme (LRS): The Liberalised Remittance Scheme (LRS) of the Reserve Bank of India (RBI) allows resident individuals to remit a certain amount of money during a financial year to another country for investment and expenditure. According to the prevailing regulations, resident individuals may remit up to $250,000 per financial year. Rate of TCS applicable from 1^st April 2020 is 5%. For non-PAN or non- Aadhar cases the rate is 10%. Authorised dealer bank is responsible to deduct TCS.
For the sale of overseas tour package: The new provisions regarding TCS on overseas tour packages require that a seller of overseas tour package shall collect TCS at the rate of 5% on the total amount from the purchaser at the time of receiving the payment. No-PAN/Aadhar case, the rate is 10%).
Purchase of Goods: If the purchase is > 50 Lakh in a FY (excluding the goods on which TCS is already applicable like tendu leaves, scrap, etc), then TCS will be applicable on the goods exceeding 50 lakhs at 0.1%. For non- PAN/ non- Aadhar cases the rate is 1%.

Sr. No.	Transaction	Rate
1	Overseas remittance of Rs 7 lacs or above covered under LRS	5% (Non-PAN or non- Aadhar cases- 10%)
2	For the sale of the overseas tour package	5% (Non-PAN or non- Aadhar cases- 10%)
3	Purchase of Goods exceeding 50 lakhs (excluding goods on which TCS is already applicable) (To illustrate if receipt of consideration for sale of goods in the FY 2020-21 is 75 lakhs then TCS is to be collected on 25 lakhs)	0.1% (Non-PAN or non- Aadhar cases- 1%)

5 % TCS on foreign remittance is not an additional or new tax. It is like TDS which you can adjust against your total income tax liability”.

(3) Collection: TCS needs to be collected at the time of receipt of amount of consideration only. So no TCS need to be collected at the time of invoicing.

(4) Gross Consideration or Ney Consideration: The proposed provisions provides that TCS @ 0.1% need to be collected on receipt of consideration. Consideration has not been defined in the notification but considering that Givernment has clarified in the past in case of TDS that no TDS to be deducted in amount of service tax or GST. Further TCS on scrap is also collected on net amount .

Here important point is sale might have happened in 2019-20 but received in 2020-21 then this may also attract TCS

(5) TCS Payments & Returns

Month of Collection	Quarter Ending	Due date of Payment	Due Date of filing return
April to June	30th June	7th day of the following month	15th July
July to September	30th September	7th day of the following month	15th October
October to December	31st December	7th day of the following month	15th January
January to March	31st March	7th day of the following month	15th May

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