TCS on 01

Sale of
Goods

- Ashish Modi
 What does the
provision say?
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

TCS ON SALE OF GOODS UNDER SECTION 206C(1H)

 What does it Imply?
NEGATIVE LIST
• Sale consideration received before 01 Oct
2020
• If sale consideration (or agreed sale
consideration) does not exceed INR 50 Lakh
during the current FY
• If turnover of the seller in the preceding FY
is INR 10 crore or less, this has to be checked
every year
• If seller exports goods
• Sale consideration pertaining to sale of
service
• If buyer is liable to deduct TDS under any
other provision of Income Tax Law & tax is
deducted by buyer
• If goods are covered by TCS provisions of
Section 206C(1)/(1F)/(1G)
• Transaction with buyer in negative List

TCS ON SALE OF GOODS UNDER SECTION 206C(1H)

 Key definitions

TCS ON SALE OF GOODS UNDER SECTION 206C(1H)

 Analysing the threshold
limit of Rs. 50 Lakhs for
receipt of consideration

TCS ON SALE OF GOODS UNDER SECTION 206C(1H)

 Key Conditions to collect TCS
• Seller should have crossed the TO limit of INR 10 Crores in the Previous FY
• Threshold Limit of INR 50,00,000 in the Current FY
• Transaction to be taken place after 30 Sep 2020
Sale made before 30 Sep 2020 and payment
received post 1 Oct 2020 – Seller is required to
collect TCS (Position also clarified in the CBDT
Circular No. 17, dated 29-09-2020)

Illustrations

*It is presumed that all the sellers have crossed the Turnover Limit of INR 10 Crore during the PFY in the Illustration above

TCS ON SALE OF GOODS UNDER SECTION 206C(1H)

COMPARISION BETWEEN 206C(1F) & 206C(1H)
Every person, being a seller, who receives any amount as consideration for sale of a motor
vehicle of the value exceeding INR 10,00,000, shall, at the time of receipt of such amount,
collect from the buyer, a sum equal to one per cent of the sale consideration as income-tax.

*It is presumed that all the sellers have crossed the Turnover Limit of INR 10 Crore during the PFY in the illustration
above
TCS ON SALE OF GOODS UNDER SECTION 206C(1H)
 When to collect the TCS
on Sale of Goods and
How?

TCS ON SALE OF GOODS UNDER SECTION 206C(1H)

 For Trade
Receivables as on
th

30 Sept
2020

Mr. S has trade receivables for sale of goods

to Mr. B as on 30th Sept, 2020 (prior to
01.10.2020). In the given case, Mr. S has to
raise debit notes immediately on receipt of
consideration of more than Rs. 50 Lakh from Mr.
B. Furthermore, if the seller receives the
consideration, say on 30th October, 2020, he
Mr. B
has to deposit the amount of TCS by 7th of
next month, i.e. 7th November, 2020, even if the Mr. S
buyer does not pay the amount of TCS to the seller.

TCS ON SALE OF GOODS UNDER SECTION 206C(1H)

 For Sales on or after
st

01 Oct
2020

TCS ON SALE OF GOODS UNDER SECTION 206C(1H)

 Frequently
Asked
Questions
TCS ON SALE OF GOODS UNDER SECTION 206C(1H)
 FREQUENTLY ASKED
QUESTIONS

TCS ON SALE OF GOODS UNDER SECTION 206C(1H)

 FREQUENTLY ASKED
QUESTIONS

TCS ON SALE OF GOODS UNDER SECTION 206C(1H)

 FREQUENTLY ASKED
QUESTIONS

TCS ON SALE OF GOODS UNDER SECTION 206C(1H)

 FREQUENTLY ASKED
QUESTIONS
TCS ON BOTH SALE AND PURCHASE TRANSACTION BETWEEN THE BUYER AND
SELLER

MR A. IS A SELLER WHO SELLS THE GOODS TO MR. B. IN TURN MR A. ALSO

PURCHASES FROM MR. B. SUPPOSE IN FY 2020-21, MR A HAS SOLD GOODS
WITH RS. 70 LAKH TO MR B AND BOUGHT RS. 40 LAKH WORTH OF GOODS
FROM MR. B. MR. B HAS PAID NET OF RS. 30 LAKH TO MR A IN FY 2020-21.

NOW IN THIS CASE THE ACTUAL CONSIDERATION RECEIVED IS LESS THAN

RS. 50 LAKH WHICH IS RS. 30 LAKH ONLY. HOWEVER, PLEASE NOTE THAT
THE TERM ‘CONSIDERATION’ USED IN SECTION 206C(1H) DOES NOT REFER
TO MONEY ONLY. ADJUSTMENT OF RECEIVABLES WITH BOOK ENTRY ALSO
AMOUNTS TO PAYMENT OF CONSIDERATION. IN THIS CASE THE
CONSIDERATION IS PAID IN ‘KINDS’. HENCE, TCS SHALL BE COLLECTED ON
RS. 20 LAKH (RS. 70 LAKH - RS. 50 LAKH) BY MR A.

HOWEVER, A CONTRARY VIEW IS ALSO POSSIBLE IN THIS CASE. HENCE,

TILL A CLARIFICATION IS ISSUED BY THE CBDT, ONE SHOULD COLLECT TCS
ON CONSIDERATION ADJUSTED THROUGH JOURNAL ENTRY IN THE BOOKS.

TCS ON SALE OF GOODS UNDER SECTION 206C(1H)

 Thanks & Regards

TCS ON SALE OF GOODS UNDER SECTION 206C(1H)