[By Jyotish M Shah, Partner]
Widening the scope of TCS (Tax Collection at Source) on foreign remittance, selling overseas tour package, and sale of goods over a prescribed limit from 1st October 2020.
Section 206C providing for TCS has been amended to widen the scope to cover:
If the buyer has not provided PAN/Aadhaar, the rate of TCS will be 10% for (1) & (2) above and 1% for (3) above.
Seller means a person whose total sales, gross receipts or turnover from the business exceeds Rs. 10 Crores during the financial year immediately preceding the financial year in which the sale of goods is made.
Exclusion: The above mentioned provision will not apply to a buyer:
Payment of Tax: Such tax collected at source is to be paid by the 7th of the succeeding month.
Return: Quarterly TCS report is to be filed in Form 27EQ within 15 days from the end of the quarter and by 15-May for the Jan-Mar quarter.
TCS Certificate: TCS Certificate must be issued to the buyer within 15 days of the due date of filing the TCS Return.
Issues:
Comment: Though the section uses the wordings receipt of consideration for sale of any goods, it will be practically difficult to raise demand against the buyer subsequently, if not raised in the invoice.
Comment: Though the section uses the wordings receipt of consideration, for practical purposes payment of TCS should be made with reference to invoice.
Comment: As per the language of the section TCS is to be collected and deposited only on the amount of sale consideration exceeding Rs.50 lacs and TCS is not to be collected and deposited upto sale consideration of Rs.50 lacs.
Comment: Sale consideration for the full financial year is to be considered for deciding whether Buyer is covered for TCS or not. TCS, however, is to be collected and paid only on the sales made after 01.10.2020 to the extent same are in excess of Rs.50 lacs.
Comment: As per the wordings of the section seller is liable to collect and deposit TCS during a financial year only if, his gross receipt or turnover of preceding financial year was in excess of Rs.10 crores.
Comment: Since advance payment cannot be said to be consideration received against the sale, TCS need not be collected and deposited at the stage of receipt of advance payment.
Comment: Since, the person is the same and having one single PAN, sales made to all his proprietorship concerns have to be clubbed together for the purpose of determining the liability for collection and deposit of TCS.
Comment: GST will also be part of sale consideration and therefore, TCS is to be collected on total amount of invoice including GST unless clarified otherwise by the department.
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