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.
- “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.
- 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.