Union Budget 2025-26 (Full) + Finance Bill, 2025

XII. Definition of “forest produce” rationalised

Sub-section (1) of section 206C of the Act states that every seller shall collect tax at source from the buyer of goods of certain specified nature at the rates specified in the sub-section.

2. Under sub-section (1) of section 206C of the Act, presently TCS at 2.5 per cent is required to be collected on sale of goods of the following nature: -

(I) Timber obtained under a forest lease

(II) Timber obtained by any mode other than under a forest lease

(III) Any other forest produce not being timber or tendu leaves

3. Representations were received that no definition has been provided in the Act for “forest produce” which is creating difficulties in application of the relevant provisions of the Act. Also the provision is being made applicable to traders who are selling such produce. To bring clarity regarding the meaning of “forest produce”, it is proposed that “forest produce” shall have the same meaning as defined in any State Act for the time being in force, or in the Indian Forest Act, 1927.

4. Further, it is proposed that to address the applicability of TCS on traders of forest produce, only such other forest produce (not being timber or tendu leaves) which is obtained under forest lease will be covered under TCS.

5. The amended rate for collection of TCS are as under:-

S No	Nature of goods	Percentage
(1)	(2)	(3)
(iii)	Timber or any other forest produce (not being tendu leaves) obtained under a forest lease	Two per cent
(iv)	Timber obtained by any mode other than under a forest lease	Two per cent

6. These amendments will take effect from the 1st day of April 2025.

[Clauses 67]

 

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Full Text:

Union Budget 2025-26 (Full) + Finance Bill, 2025

Definition of forest produce clarified to align with State Acts or Indian Forest Act, narrowing TCS scope to leased produce. The Finance Bill aligns the definition of forest produce with any State Act or the Indian Forest Act, 1927, to clarify TCS coverage; it confines TCS on 'other forest produce' (excluding timber and tendu leaves) to items obtained under a forest lease, and sets TCS at two per cent for timber or other forest produce under lease and two per cent for timber obtained otherwise, effective from 1 April 2025.