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Article Details

NEW TCS PROVISIONS APPLICABLE FROM 01ST OCTOBER, 2020

TCS PROVISIONS APPLICABLE FROM 01ST OCTOBER, 2020

With an aim to Increase Tax payers database, report high value transactions at transaction level as well as implementing tax collection well in advance, The Finance Act, 2020 expanded provisions of Tax Collection at Source (TCS).

Provisions proposed to be effective from 1st October, 2020 are summarised as under :

Section 206C (1G):

Foreign Remittance through Liberalised Remittance Scheme (LRS)

Every person being an authorised dealer, who receives an amount or an aggregate of amounts of Seven Lakh Rupees or more in a ï¬nancial year, for remittance out of India under the LRS of the Reserve Bank of India, shall be liable to collect TCS at the rate of ï¬ve percent of such amount as Income-Tax.
In case of non-PAN/Aadhar cases, the rate shall be ten per cent.
General concession of 25% reduction in rate of TDS / TCS utpo 31.03.2021 is not applicable under this section.

Overseas Tour Package

Seller of an “Overseas Tour Program Package” shall be liable to collect TCS at the rate of ï¬ve percent of such amount as Income-Tax.
In non-PAN/Aadhar cases, the rate shall be ten per cent.
There is no monetary limit for this transaction.
“Overseas Tour Programme Package” means any tour package which offers visit to a country or countries or territory or territories outside India and includes expenses for travel or hotel stay or boarding or lodging or any other expenditure of similar nature or in relation thereto.
General concession of 25% reduction in rate of TDS / TCS upto 31.03.2021 is not applicable under this section.

Loan obtained from Financial Institution for Education Purpose

Every person being an authorized dealer, who receives an amount or an aggregate of amounts of Seven Lakh Rupees or more in a ï¬nancial year, for remittance out of India being loan obtained from a ï¬nancial institution as deï¬ned u/s 80E of the Act for the purpose of pursuing any education, shall be liable to collect TCS at the rate of one half percent of such amount as Income-Tax.
In case of non-PAN/Aadhar cases, the rate shall be one per cent.
General concession of 25% reduction in rate of TDS / TCS upto 31.03.2021 is not applicable under this section

Non applicability of Section 206 (1G) in following cases :

If the buyer is liable to deduct TDS under any other provisions and has deducted the same.
If a buyer is Central Government, State Government, an embassy, a high commission, a legation, a commission, a consulate, the trade representation of a foreign state, a local authority or any other person as notiï¬ed by Central Government.

Section: 206C(1H)

Sale of Goods

“Seller” of any goods shall be liable to collect TCS @ 0.10% of the sale value from buyer, if the value exceeds Rs. 50 Lakh.
Limit of Rs. 50 Lakh shall be for each buyer in a ï¬nancial year.
In our view, during the ï¬rst year of implementation of this section, sale made to buyers upto 30.09.2020 should not be considered for calculating threshold limit of Rs.50 lakh.
Considering COVID-19 situation, TCS rate is curtailed to be 0.075% upto 31.03.2021 after considering 25% reduction.
Effective from 01.04.2021, TCS rate shall be 0.10%.
In non-PAN/Aadhar cases, the rate shall be one per cent.
Export to customer is to be excluded.

Non applicability of Section 206 (1H) in following cases :

(i) If the buyer is liable to deduct TDS under any other provisions and has deducted the same.

Please Note:
“Seller” means a person whose total sales, gross receipts or turnover from the business carried on by him exceed Ten Crore rupees during the ï¬nancial year immediately preceding the ï¬nancial year in which the sale of goods (Sale of Services is not covered) is carried out, not being a person as the Central Government may, by notiï¬cation in the Oï¬ƒcial Gazette, specify for this purpose, subject to such conditions as may be speciï¬ed therein.

“Buyer” does not include Central Government, State Government, an embassy, a high commission, a legation, a commission, a consulate, the trade representation of a foreign state, a local authority or any other person as notiï¬ed by Central Government or a person importing goods into India or any other person as the Central Government may, by notiï¬cation in the Oï¬ƒcial Gazette, specify for this purpose, subject to such conditions as may be speciï¬ed therein.

In our view, TCS should be levied at the time of raising “Tax Invoice” itself rather than waiting for “Collection / Realisation” as there is enough ambiguity in the law language. Further, TCS should be levied on “Total Value” of “Tax Invoice” and not only on basic value.

Following table clariï¬es situation: