TCS on sales if payment received in next financial year

[Ashish Gupta]

Dear Sir,

Most of the people are charging TCS on Sales in the Sales Invoice. TCS on Sales is based on payment collection. If Sales happens in say March 2021 wherein TCS is charged in the invoice and payment is done say in May, how is TCS on Sales collected in such case?

Since TCS is already charged in invoice in March, it will need to be paid. Also since TCS is based on collection, again compliance issue might come as TCS again becomes payable.

26AS will also become complicated as party to party different systems are followed as some charge TCS on collection and some in the invoice

AI Summary

Clarification on Timing of TCS Payments: Payable Upon Payment Receipt, Not Invoice Issuance; Address Rate Changes Yearly A discussion was held regarding the timing of Tax Collected at Source (TCS) payments when sales occur in one financial year and payments are received in the next. The initial query raised concerns about the compliance issues arising from charging TCS on sales invoices versus upon payment collection. Replies highlighted that TCS is technically payable upon receipt of payment, though some businesses charge it on invoices for convenience. It was suggested to reconcile accounts to ensure correct tax payment. Additionally, if TCS rates change between financial years, any differential tax must be addressed upon payment collection.