TCS UNDER SECTION 206C(1) H

[Vijay Batra]

Dear All

Can anyone confirm TCS UNDER SECTION 206C(1) H will be applicable on supply of SEZ Sales and EOU division

[KASTURI SETHI]

Supply (Sales) to SEZ is export. Although SEZ unit located in India, but supply to SEZ is to be treated as export of goods out of India as per Section 51 of SEZ Act. Supply(sales) to EOU is treated as Deemed Export.--Para 7.02A (b) of FTP 2015-2020 (extended up to March, 2021). Same benefits are available to both types of export. In my view, TCS is not applicable inasmuch as the above sales fall in the exclusion clause, "other than the goods being exported out of India ". It is to be treated out of India for the purpose of export.

Section 206 C(1) H) of Income Tax Act

“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:”

Pl. note that I am not expert in Income Tax field but my reply is based on FTP read with above Section of Income Tax Act.

[YAGAY and SUN]

In our view, exemption will be only for the supplies which are for authorized usage purposes.

AI Summary

TCS on high-value goods: supplies to SEZ and EOU may be outside charge if treated as exports
Supplies to SEZs are treated as exports and supplies to EOUs as deemed exports; where goods qualify as exported out of India they fall within the statutory exclusion from TCS, so TCS will not apply to such receipts. A contrasting view limits the exclusion to supplies made for authorized end use under export/EOU authorization frameworks.