TCS Provisions – Goods Related w.e.f October 1, 2020, Under Income Tax Act 1961

TCS Provisions – Goods Related w.e.f October 1, 2020, Under Income Tax Act 1961

Objective

• To expand the scope of provisions relating to Tax collection at source;
• To monitor disclosure of transactions in the ITR filed by the person;
• To investigate the leakages of Direct Tax Revenues as well as Indirect Tax Revenues;
• To Increase Tax collections by the Sovereign;
• To improve tax compliance and disclosure processes prevalent in the Country;
• To curb/check on fraudulent, fake, and bogus transactions;
• To prosecute law evaders;
• To minimize undesirable personal linkages/connections between the Assessee and Dept. Officials – by building technology platforms using AI and VR for monitoring, reporting, and faceless assessment under tax laws.

Related Topic:
Forest produce is not agriculture produce

Legal TCS Provisions Section 206 (1H )

“Every person, being a seller, who receives any amount as consideration for the sale of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, other than the goods being exported out of India or goods covered in sub-section (1) or sub-section (1F) or sub-section (1G) shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 0.1 percent of the sale consideration exceeding fifty lakh rupees as income-tax:

Section 2 (31)

“person” includes—

1. (i) an individual,

2. (ii) a Hindu undivided family,

3. (iii) a company,

4. (iv) a firm,

5. (v) an association of persons or a body of individuals, whether incorporated or not,

6. (vi) a local authority, and

7. (vii) every artificial juridical person, not falling within any of the preceding sub-clauses.

8. Explanation.—For the purposes of this clause, an association of persons or a body of individuals or a local authority or an artificial juridical person shall be deemed to be a person, whether or not such person or body or authority or juridical person was formed or established or incorporated with the object of deriving income, profits or gains;

Considerations

1. Not defined under the Income Tax Act 1961

2. Contextual reference – Capital Gains u/s 45 and Section 50C of the Income Tax Act 1961 and Chapter XX-A – Section 269A – ACQUISITION OF IMMOVABLE PROPERTIES IN CERTAIN CASES OF TRANSFER TO COUNTERACT EVASION OF TAX

3. consideration

n. 1) payment or money. 2) a vital element in the law of contracts, consideration is a benefit that must be bargained for between the parties and is the essential reason for a party entering into a contract. Consideration must be of value (at least to the parties) and is exchanged for the performance or promise of performance by the other party (such performance itself is a consideration).

Value

✓ value or aggregate of such value exceeding fifty lakh rupees in any previous year,

• Exclusions

❖ other than the goods being exported out of India or

❖ or goods covered in sub-section (1) – alcoholic liquor, tendu leaves, timber, forest produce, Scrap or minerals, being local or lignite or iron ore or

❖ or sub-section (1F) – TCS on a motor vehicle or

❖ sub-section (1G) – overseas tour operator TCS or TCS on remittances out of India

Trigger Point of levy

✓ shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 0.1 percent of the sale consideration exceeding fifty lakh rupees as income-tax:

✓ In the cases of business transactions where PAN and/or Aadhaar Number is notified to Seller of the goods

Definitions Seller

Explanation- for the purpose of this subsection

(b) “Seller” means a person [section 2(31)] whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees ( for the current financial year – turnover as per previous financial year audited financial statements should exceed Rs.10 Crores then only otherwise Not Applicable) during the financial year immediately preceding the financial year in which the sale of goods is carried out,

❖ Exclusions

not being a person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.

Disclaimer

All views stated are my personal views, they are not binding on WIRC/ICAI. My personal views may be correct/incorrect as they are expressed based on my understanding of the subject.

All members/listeners are requested to go through tax law provisions on their own and advise their clients accordingly as each situation is peculiar in itself.

All Illustrations provided are imaginary and any resemblance to any situation/s is purely coincidental and without any intentions to disclose private and confidential information.

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