Income-Tax-TCS on Sale of Goods in Excess of ₹ 50 Lacs

[A Wilson]

Dear All,

Income-Tax-TCS on Sale of Goods in Excess of ₹ 50 Lacs

• Whether this TCS @ 0.1% to be collected on the amount received towards Basic Value or Invoice Value including GST?

Please advice on this.

Thanks,

Wilson.A

[YAGAY andSUN]

Finance Bill 2020 has proposed to insert in section 206 of the Income Tax Act, 1961, sub-section (1H) to levy TCS on sale of goods, which was to be effective 1st April, 2020. However, the Parliament while passing the Bill in the Lok Sabha has amended the said section and has also deferred the date from which it becomes operative to 01st October, 2020 instead of 1st April, 2020

The word ‘consideration’ is not defined. The dictionary meaning of consideration is compensation, payment or reward. In terms of Section 145A irrespective of the treatment in books of accounts, the value of sales will include the amount of any tax recovered. Hence the consideration amount will be inclusive of GST for the purpose of collection of TCS. Further, It would depend upon the terms of the contract. If the contract is on CIF basis, the consideration will include insurance and freight.

AI Summary

Tax Collection at Source on sale of goods includes GST for TCS computation, subject to contractual allocation and operative date. The provision levying Tax Collection at Source on sale of goods was deferred to 1 October 2020; the undefined term consideration is to be read to include taxes recovered, so GST forms part of the consideration for TCS computation, subject to the parties' contractual allocation (for example, CIF includes insurance and freight).