Section 206 C (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 Aadhar 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.

 

 

Date of Applicability-

This provision will be applicable with effect from 1st October 2020.

 

Rate of TCS under section 206C (1H)

 

a)     Seller of all goods will be liable to collect TCS

·        @ 0.1% of sale consideration exceeding INR 50 Lakhs in a Financial Year

 

b)    Tax to be Collected @ 5%

·        if the buyer does not provide PAN/Aadhar (as per Memorandum explaining the provisions in the Finance Bill, 2021).

 

Turnover for applicability of section 206C (1H)

TCS obligation will be on seller who have gross receipts/turnover exceeding INR 10 Crores in preceding financial year

 

Conditions for applicability of section 206C (1H)

a)     TCS obligation will arise

·        if the sale is made to a resident person.

b)    No requirement of TCS u/s 206C (1H) on a transaction:

·        if TDS is deductible under any other provision or

·        TCS is collectible under section 206C [excluding 206C(1H)]

c)     On a given transaction

·        either TDS u/s 194Q will apply

                          or

·        TCS u/s 206C(1H) will apply

Both TDS u/s 194Q and TCS u/s 206C (1H) will not apply on the same transaction

 

d)    In case of potential overlap between the two provisions

·        TDS u/s 194Q will apply and TCS u/s 206C(1H) will not apply

 

 

Time Limit for collection of TCS under section 206C (1H)

Tax to be collected at the earliest of the following dates:

·        time of credit of such sum to the account of the seller

                                       or

time of payment