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

TCS 0.1% on Sales Over 50 Lakhs: Includes GST in 'Consideration' Per Finance Bill 2020, Section 206 Amendment. A query was raised regarding whether the Tax Collected at Source (TCS) at 0.1% on the sale of goods exceeding 50 lakhs should be collected on the basic value or the invoice value including GST. In response, it was clarified that the Finance Bill 2020 proposed an amendment to section 206 of the Income Tax Act, 1961, to levy TCS effective from 1st October 2020. The term 'consideration' for TCS purposes includes GST, aligning with Section 145A, and may also include insurance and freight depending on contract terms.