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:-

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

[Clauses 67]

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