Table of Contents
1. Section 206C(1H) of Income Tax Act, 1961
Tax to be collected at source by the seller on receipt of sale consideration for the goods sold to the buyer.
2. Who should collect tax under section 206C(1H)?
- Any seller whose turnover/gross receipts exceeds Rs.10 crores during the financial year immediately preceding the financial year.
Note: For calculating Supplier’s total turnover, sale of services should also be included.
3. What is the limit for non-collection of TCS under section 206C(1H)?
- Rs. 50 lakhs
- i.e. if the aggregate amount of consideration received from sale of goods does not exceed Rs. 50 lakhs in the financial year, the seller need not collect tax under section 206C(1H).
4. What is the point of taxation as per section 206C(1H)?
Tax under this section should be collected at the time of receipt of sale consideration from the buyer.
5. Rate of TCS under section 206C(1H)
- Tax shall be collected at the rate of 0.1% of such sum exceeding Rs.50 lakhs.
- If the buyer has not furnished his PAN/Aadhaar number to the seller, tax shall be collected at the rate of 1% instead of 0.1%.
6. Whether tax should be collected on export sale consideration under section 206C(1H)?
No, provisions of section 206C(1H) does not apply in respect of Export sales.
7. Will the provisions of section 206C(1H) apply, if the buyer is the government or local authority?
- No, section 206C(1H) shall not apply to the following persons, I.e. no tax need to be collected from the following persons.
- Central government, state government,
- Embassy, Consulate
- High commission, legation
- Trade representation of foreign state
- Local authority
- Importer of goods
8. Will the provisions of section 206C(1H) apply, if the buyer deducts tax as per section 194Q?
If the buyer deducts tax as per the provisions of section of 194Q, the seller need not collect tax as per the provisions of section 206C(1H).