Tax Collection at Source (TCS) Provisions
Last edited on 17-June-2021
Sec 206C (1) & (1F) TCS on certain goods – Scrap sales, Vehicle Sales
Conditions
- Seller has turnover/receipts exceeding Rs.1 crore in case of business or Rs.50 lakhs in case of profession in previous financial year
- Collect by Seller at time of sales or cash receipt whichever is earlier
- TCS @ 1% for scrap sales
- TCS @ 1% on motor vehicle sales if consideration exceeds Rs.10 lakhs
- TCS @ 5% if PAN not furnished or IT returns not filed by collectee
- 75% of specified rate if between 14-05-2020 to 31-03-2021
- Also applicable if alcoholic liquor or tendu leaves or timber or any forest produce or minerals or parking lot or toll plaza or mining or quarrying at different TCS rates
- “scrap” means waste and scrap from the manufacture or mechanical working of materials which is definitely not usable as such because of breakage, cutting up, wear and other reasons
Not Applicable
- If form 27C is furnished for scrap sales
- If buyer is central/state government, embassy, PSU for scrap sales
- If buyer is central/state government, embassy, local authority, PSU engaged in passenger transportation for vehicle sales
- If scrap sales is for personal consumption
Sec 206C (1H) TCS on certain goods – sale of goods
Conditions
- Seller has turnover/receipts exceeding Rs.10 crores in previous financial year
- Aggregate sales or receipt for sales to a person exceeding Rs.50 lakhs in that financial year
- TCS @ 0.1% on the amount exceeding Rs.50 lakhs
- 75% of specified rate till 31-03-2021
- From 01-10-2020
- TCS @ 1% if PAN or Aadhaar not furnished – refer Section 206CC
- TCS @ 5% if 2 years income tax return not filed by collectee – refer Section 206CCA
- For sale/receipt calculation include GST amount received (as per circular 17 dated 29-09-2020)
- Disregard sales returns for TCS % calculation but consider for checking threshold of Rs.50 lakh limit
Not Applicable
- If TDS u/s 194Q is applicable and has been deducted
- If goods exported out of India
- If scrap sales or motor vehicle sales
- Buyer is central/state government, embassy, local authority
Extracts of Income Tax provisions for reference:
1 Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc.
206C. (1) Every person, being a seller shall, at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the buyer of any goods of the nature specified in column (2) of the Table below, a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of such amount as income-tax:
…….
(1F) Every person, being a seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding ten lakh rupees, shall, at the time of receipt of such amount, collect from the buyer, a sum equal to one per cent of the sale consideration as income-tax.
………..
(1H) Every person, being a seller, who receives any amount as consideration for sale of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, other than the goods being exported out of India or goods covered in sub-section (1) or sub-section (1F) or sub-section (1G) shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 0.1 per cent of the sale consideration exceeding fifty lakh rupees as income-tax:
Provided that if the buyer has not provided the Permanent Account Number or the Aadhaar number to the seller, then the provisions of clause (ii) of sub-section (1) of section 206CC shall be read as if for the words “five per cent”, the words “one per cent” had been substituted:
Provided further that the provisions of this sub-section shall not apply, if 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.
Explanation.—For the purposes of this sub-section,—
(a) “buyer” means a person who purchases any goods, but does not include,—
(A) the Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or
(B) a local authority as defined in the Explanation to clause (20) of section 10; or
(C) a person importing goods into India or any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein;
(b) “seller” means a person whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the sale of goods is carried out, not being a person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.
……..
2 (10A) In case the provisions of sub-section (1) [except the goods referred at serial number (i) in the TABLE], (1C), (1F) or (1H) require collection of tax at source during the period commencing from the 14th day of May, 2020 to the 31st day of March, 2021, then, notwithstanding anything contained in these sub-sections the collection of tax shall be made at the rate being the three-fourth of the rate specified in these sub-sections.
……….
Explanation.—For the purposes of this section,—
(a) “accountant” shall have the meaning assigned to it in the Explanation to sub-section (2) of section 288;
(aa) “buyer” with respect to—
(i) sub-section (1) means a person who obtains in any sale, by way of auction, tender or any other mode, goods of the nature specified in the Table in sub-section (1) or the right to receive any such goods but does not include,—
(A) a public sector company, the Central Government, a State Government, and an embassy, a High Commission, legation, commission, consulate and the trade representation, of a foreign State and a club; or
(B) a buyer in the retail sale of such goods purchased by him for personal consumption;
(ii) [***]
(iii) sub-section (1F) means a person who obtains in any sale, goods of the nature specified in the said sub-section, but does not include,—
(A) the Central Government, a State Government and an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or
(B) a local authority as defined in Explanation to clause (20) of section 10; or
(C) a public sector company which is engaged in the business of carrying passengers.
(ab) [***]
(b) “scrap” means waste and scrap from the manufacture or mechanical working of materials which is definitely not usable as such because of breakage, cutting up, wear and other reasons;
(c) “seller” with respect to sub-section (1) and sub-section (1F) means the Central Government, a State Government or any local authority or corporation or authority established by or under a Central, State or Provincial Act, or any company or firm or co-operative society and also includes an individual or a Hindu undivided family whose total sales, gross receipts or turnover from the business or profession carried on by him exceed 73[one crore rupees in case of business or fifty lakh rupees in case of profession]74 during the financial year immediately preceding the financial year in which the goods of the nature specified in the Table in sub-section (1) are sold.
1 Sub-sections (1G) and (1H) Ins. by the Act No. 12 of 2020, w.e.f. 1-10-2020.
2 Ins. by the Act. No. 38 of 2020, w.r.e.f. 14-5-2020.
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