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

TCS on sales collection principle: tax is triggered on receipt of payment, not invoice issuance.
TCS on sales is triggered on receipt of sale consideration under the Income Tax regime, not on invoicing; taxpayers who charge TCS in invoices must reconcile amounts invoiced with amounts actually collected and disclose uncollected TCS in the balance sheet, depositing it when payment is received. If the statutory TCS rate changes between invoice date and collection date, the collector must collect and remit the rate differential on receipt.