Tax Collected at Source (TCS) is the tax payable by the seller which he collects from buyer at the time of sale. Tax Collected at source is governed by Section 206C of the Income Tax Act, 1961.Vide Finance Bill 2020, it is proposed to widen the scope of TCS by introducing Section 206C(1H) and Section 206C(1G) for collecting tax on sale of goods by specific seller and for collecting tax on foreign remittance under the Liberalized Remittance Scheme & sale of overseas tour package respectively. Originally it was scheduled to be effective from 1st April 2020 but later on it has been provided that it will be effective from 1st Oct 2020.
Section 206C(1H):
Applicability: Every seller whose total sales, gross receipts or turnover from his business exceeds INR 10 Crores in the immediately preceding Financial Year.
Scope: Seller who receives any amount as consideration for sale of any goods aggregating to 50 Lakhs or more in a financial year from a buyer, at the time of receipt of such amount is required to collect tax at source (TCS) at the rate 0.1 per cent on the sale consideration exceeding Rs. 50 Lakhs. In case, the buyer fails to provide PAN/Aadhar, TCS shall be collected at the rate of 1 per cent.
Section 206C(1G)(a):
Applicability: An Authorized dealer who is required to Collect tax collected at Source (TCS) from buyer of Foreign Currency remitting outside India under LRS (Liberalized Remittance Scheme).
Scope: If, An Authorized Dealer remit more than Rs. 7 lakhs in a financial year then he will be required to collect TCS at the time of Debiting the buyer or at the time of receipt from buyer whichever is earlier at rate of 5% of the amount received from buyer. In case buyer fails to provide PAN, TCS shall be collected at 10%.
(Note:0.50% if the amount being remitted out is a loan obtained from any financial institution as defined in section 80E, for the purpose of pursuing any education)
Section 206C(1G)(b) :
Applicability: Seller of an overseas tour program package is required to collect Tax collected at source from buyer of Overseas Tour package. Scope: Seller will collect TCS at the time of Debiting the buyer or at the time of receipt from buyer whichever is earlier. The TCS rate will be 5% of the amount received from buyer. In case buyer fails to provide PAN, TCS shall be collected at 10%.
