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Applicability of TCS u/s 206C(1H) on GST Component?

There were doubts among taxpayers whether TCS u/s 206C(1H) is to be collected on net of GST amount or inclusive of GST. The matter has been clarified by Income Tax Department vide Circular No.17/2020 dated 29.09.2020

Para 4.6 of circular read as under:

4.6 Adjustment for sale return, discount or indirect taxes

"Adjustment for sale return, discount or indirect taxes 4.6.1 It is requested to clarify that whether adjustment is required to be made for sales return, discount or indirect taxes including GST for the purpose of collection of tax under sub-section (lH) of section 206C of the Act. It is hereby clarified that no adjustment on account of sale return or discount or indirect taxes including GST is required to be made for collection of tax under sub-section (IH) of section 206C of the Act since the collection is made with reference to receipt of amount of sale consideration."

The above para clearly states that TCS u/s 206C(1H) is to be collectd on GST Portion also.

What is TCS u/s 206(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.

Concessional rate of TCS due to pandemic, applicable upto 31.03.2021 as per Press Release dated 13.05.2020 - 0.075% 

Higher rate if buyer does not provide PAN / Aadhar - 1% 

Who is liable to collect TCS - 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 relevant financial year.

Examples on TCS u/s 206(1H).

Receipts from 01.04.2020 to 30.09.2020	Receipts from 01.10.2020 to 31.03.2021	Total Receipts in FY 2020-21	TCS applicable on
A	B	C = (A + B)	(C – 50 Lakh) OR (B) WHICHEVER IS LOWER
4,000,000	1,500,000	5,500,000	500,000
6,000,000	1,500,000	7,500,000	1,500,000
-	1,500,000	1,500,000	-
-	6,000,000	6,000,000	1,000,000
6,000,000	6,500,000	12,500,000	6,500,000
4,500,000	6,500,000	11,000,000	6,000,000

 

Somanagouda

Dear Sir,
TCS Collection at the time Receipts of Payment or We should Collect TCS in Sales Invoice...
Also We have made Sales of Rs.1 Crore up to Sept-20 and Received 50Lakhs up to Sept-20.and Reaming 50lakh Received after 01.10.20....Should we need to collect TCS on Such receipts of payment which sold up to Sep-20....

Kindly Advise....

Replied to Abhay Prajapati

TCS is on receipt basis and it will also apply on payments received after 30.09.2020 for the sales made in past i.e. upto 30.09.2020

Replied to Abhay Prajapati

Yes, You need to collect TCS from Buyer and pay to Income tax department by 7th of next month. Provide Seller Form 16A on quaretly basis.

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