This TCS is applicable to the seller, which means the seller has to collect the TCS on receipt of sold goods and pay to the Government. Also please note that the seller should be the seller of goods and receipt should be on account of the sale of goods only and not for services.
TCS to be charged on the invoice on Basic value only and not on Basic + GST, as CBDT has issued a Circular No. 23/2017 on 19.07.2017 to provide for non-deduction of tax on the GST amount. The rationale of such exclusion was that the amount of GST is collected on behalf of the government and does not take the character of consideration for services rendered. Though the clarification was issued in respect of TDS, similar clarification in the case of TCS is not yet released. As per me, the TCS should be on the basic amount, however, one may take a view to charging on Basic + GST to avoid any short collection if any adverse the clarification comes in the future.
TCS is also payable on advance received for the supply of goods if meets applicability criteria. If any advance received is to be returned on account of cancellation of the contract then the advance to be paid after adjustment of TCS paid as it can not be recovered from the Government by the seller. TCS is Not applicable In case of any Import into India or Export from India for other exclusion see the above section given in Box.
The rate of TCS is generally 0.1% (Due to COVID now 0.075%) when the buyers provide PAN or Aadhar no otherwise 1%. Also, if the buyer is deducting any type of other TDS as per IT Act on this invoice then this provision will be out of the picture.
This is not applicable to all seller; it is applicable to those sellers only which previous year sell is more than 10 Crores and current year buyer wise receipt is more than 50 Lakhs. This means if anyone falls under this category then he needs to charge and collect and pay to the Government or pay and raise the debit note for collection. This 50 Lakhs Limit to be calculated buyer wise and not the firm’s total turnover It may be noted that this TCS applies only in cases where buyer wise receipt of sale consideration exceeds Rs. 50 lakhs in a financial year. As the threshold is based on the yearly receipt, it may be noted that only for the purpose of calculation of this threshold of Rs. 50 lakhs, the receipt from the beginning of the financial year i.e. from 1st April 2020 shall be taken into account not for charging, chargeability shall start w.e.f. 1st October 2020.
For collection, it is advised TCS to be charged on the buyer’s invoice, the buyer wise 50 Lakhs Limit to be calculated from 1st April 2020 but chargeability shall be applicable from 1st October 2020, for example, if the seller sells to Customer A Rs 90 Lakhs and received the same till 30th September 2020 and Rs 20 Lakhs on 1st October 2020 and received the same also, even then after crossing the 50 Lakhs before 1st October, the customer is qualified for TCS provision but till 30th September there is no TCS on its additional 40 Lakhs received hence no TCS can be charged. The said section has come only w.e.f. 1st October 2020. Therefore, receipts up to 30th Sept 2020 is not covered under the TCS or charged on this however immediate w.e.f. 1st October 2020 all his receipt will be subject to TCS, hence TCS shall be payable on this 20 Lakhs. For more understanding kindly refer the Table A attached.
In case if any seller misses or fails to charge this on his invoice, he can charge and collect this through a separate debit note also. Please note that TCS to be paid after crossing the above monetary receipt criteria, after receiving the amount and on “receipt amount” only, means the amount received is inclusive of GST or not is irrespective. Whatever received above to the monetary limit shall be the basis for TCS calculation on the reverse calculation basis assuming that TCS is included. Also, it is to be paid only after receipt and reverse calculation thereon irrespective of the fact that you have charged this on the invoice or receiving through debit note as the case may be.
Since sub-section (1H) of section 206C of the Act applies on receipt of sale consideration, the provision of this subsection shall not apply on any sale consideration received before 1st October 2020. Consequently, it would apply on all sale consideration (including advance received for sale) received on or after 1st October 2020 even if the sale was carried out before 1st October 2020. Since the threshold of fifty lakh rupees is with respect to the previous year, calculation of receipt of sale consideration for triggering TCS under sub-section (1 H) of the section, 206C shall be computed from 1st April 2020. Hence, if a person being seller has already received fifty lakh rupees or more up to 30th September 2020 from a buyer, the TCS under sub-section (1 H) of section 206C shall apply on all receipt of sale consideration during the previous year, on or after 15t October 2020, from such buyer.
Further, the seller in most of the cases maintains a running account of the buyer in which payments are generally not linked with a particular sale invoice. Therefore, in order to simplify and ease the compliance of the collector, it maybe noted that this TCS provision shall be applicable on the amount of all sale consideration received on or after 1st October 2020 without making any adjustment for the amount received in respect of sales made before 1st October, 2020. Mandating the collector to identify and exclude the amount in respect of sales made up to 30th September 2020 from the amount received on or after the 1st of October, 2020 would have resulted in an undue compliance burden for the collector and also litigation.
Since the seller is responsible to collect the TCS on consideration received by him on a receipt basis, the Seller needs to be charged on the invoice then only it will be recovered. Alternatively, after payment of TCS on the due date, a separate invoice/debit note for TCS also can be raised. However, on the receipt of TCS no further TCS is required to be paid.
It has been clarified by the CBDT Circular No. 17/2020 dated. 29-09-2020 that, no adjustment on account of sales return, discount on indirect tax including GST is required to be made for the collection of tax since the collection is made w.r.t. receipt of the amount of sales consideration
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