India, 21 September 2020

As per the recent addition in section 206C of the Income Tax Act, any seller whose total sales/ gross receipts/turnover from business exceed INR 10 crores in the previous financial year will have to comply with the new TCS provisions.

Here, the seller will have to collect tax as TCS at a rate of 0.1% from the buyer when the amount of sale consideration received for ANY goods sold (excluding exports) exceeds INR 50 lakhs. TCS will be applicable only on the sale consideration that is more than INR 50 lakhs. Furthermore, if the buyer does not provide his/her PAN/Aadhar details, the seller has to collect tax as TCS at a higher rate of 1%.

However, due to the pandemic across the country, the TCS rates are reduced from 0.1% and 1% to 0.075% and 0.75% respectively for the period up to 31 March 2021.

These provisions are not applicable when the buyer is:
The Central/State Government, Local Authority, or similar
Importing goods into India
Deducting tax at source (TDS).

Along with the provisions mentioned above, Section 206C is also amended to bring:
Amounts remitted under the Liberalised Remittance Scheme (LRS) of the RBI (TCS at 5%* on the amount above INR 7 lakhs) and
Amounts received for the overseas tour program package (TCS at 5%)
under the purview of TCS.

*TCS rate will be 1.5 % if the amount being remitted under LRS is a loan obtained for higher education which is covered under section 80E

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