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Circular on TCS On Sale of Goods - WEF 1st October 2020

Effective from 1st October 2020 a new provision of Tax Collected at Source (TCS) has been introduced. A seller who receives any amount as consideration for the sale of goods of the value or aggregate of such value exceeding Rupees 5 million in any financial year shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 0.10% [0.075% till 31st March, 2021] of the sale consideration exceeding Rupees 5 million as Tax Collected at Source (TCS).

The buyer is eligible for claiming a credit for this TCS paid by him in the tax returns against his tax dues.

Further,

  •  “Seller” for this purpose means, whose turnover exceeds Rupees 100 million
  •  TCS has to be collected at the time of receipt of such amount i.e. on RECEIPT BASIS and not on generation of the sales invoice.
  •  Sales made to buyers up to 30th September, 2020 shall not be liable to collect the TCS.

-Non-Applicability:

  • Where the turnover of the seller is less than Rupees 100 million in the financial year.
  • On sale of services
  • Where goods are exported out of India
  • Where any tax is deducted at source (Withholding tax) on such goods
  • Where the buyer is the Central Government, State Government, Embassy, High Commission, Legation or trade representation of foreign state.
  • Where the buyer is a local authority.