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TCS on sale of goods provision and applicability.pptx
- 1. TCS on Saleof Goods By CMA S VENKANNA
- 2. Introduction • TCS • Thesupplier of goods collects an additional amount from buyer of goods over and above the sale consideration. • Not applicable to services • Section 206C Existing Provisions • Existing TCS on Sale of Certain Goods – applicable on sale of • Liquor • Tendu leaves • Timber/Forest Produce • Scrap • Parking lot • Toll plaza • Minerals (Coal, lignite, iron ore) • Hence the new provisions is not applicable to the above goods.
- 3. Section 206C • Summary •Sub Section (1) • Existing Provision on sale of certain products • Sub Section (1C) • TCS on Parking Lot, Toll Plaza, Mining and Quarrying • Sub Section (1F) • TCS on sale of motor vehicles • Sub Section (1G) • Relating Authorized Forex Dealer under FEMA • The New Provision • Sub Section (1H) • TCS on All goods except the above
- 4. Sec.206C(1H) - Applicability •Section 206C(1H) widen the scope of Section 206C • TCS on Sale of all Goods • W.e.f. from 1st October 2020 • Collect tax on sale of goods in addition to sale consideration • Rate of TCS = 0.1% • At present due to corona the rate is reduced to 0.075% up to 31st March 2021 • If the buyer does not produce PAN or Aadhaar, the TCS rate is 1%
- 5. Conditions • The Turnoverin the Previous Financial Year is more than Rs.10 crores • (upto 31st March 2020) • Turnover for this purpose includes GST Charged on Supply • This year TCS is applicable • When a Seller RECEIVES more than Rs.50 lakhs from Buyer • TCS Applicable only on the amount in excess of Rs.50 lakhs • If the Turnover is less than Rs.10 crores in the previous – TCS provision is not applicable. • No TCS for the Payments received before 30th September 2020
- 6. Calculating Turnover • Whilecalculating the threshold of Rs.10 Crore, the TOTAL TURNOVER including gross receipts and sales is to be taken into consideration. • Also, the Sale of Service shall also be taken into consideration while calculating the Limit of 10 Crore. • Whereas for computing the threshold of Rs.50 Lakhs, ONLY SALE OF GOODS is to be considered. • GST Component is to be included while calculating the Sales Consideration.
- 7. Issues • Turnover forthis purpose is inclusive of GST • The Threshold limit of Rs.50 lakhs is applicable only to each buyer separately. • If Advance is received after 1.10.2020 for future supply, TCS is applicable. • The Threshold Limit of Rs.50 lakhs should be calculated for the whole year from 1st April 2020 to 31st March 2021 • Received Rs.1.00 crore before 1.10.2020. Receives Rs.10 lakhs after 1.10.2020. Total Received Rs.1.10 crores. TCS on Rs.10 lakhs only. • Not on Rs.60 lakhs (1.10 – 50)
- 8. Example - Applicability ParticularsAmount (Rs.in Crores) Sale of Goods 5.00 Sale of Services 4.00 Total Turnover for 2019-20 9.00 AddGST at 18% 1.62 Total 10.62 The Turnover Exceeds Rs.10 Crores, the new provision TCS applicable from 1.10.2020
- 9. Example - ThresholdLimit Amount collected from 1.4.20 to 30.9.20 Amount collected from 1.10.20 to 31.3.21 TCS on Rs.35 lakhs Rs.25 lakhs Rs.10 lakhs (35+25=60-50) Rs.60 lakhs Rs.15 lakhs Rs.15 lakhs (The limit crossed before 30.9.20) Rs.25 lakhs Rs.15 lakhs No TCS
- 10. How to calculateTCS Particulars Amount (Rs.) Value of Goods (in excess of Rs.50 lakhs) 2500000 Add: GST at 28% 700000 Total 3200000 TCS at 0.075% 2400 Invoice Value 3202400
- 11. Exemptions • Sale doesnot include the following • Sale to Central Government • Sale to State Government • Sale to local authorities • Sale of goods to High Commission, Embassy • Export of Goods • Only of export of goods outside India is excluded • Deemed Exports: Sale to SEZ and EOU – TCS Applicable • Sale of Services in India or export of services • No TCS on the importer of Goods • Note: Includes Government Entities and Corporations
- 12. Legal Issues • Definitionof Goods – As per Sale of Goods Act 1930 • Includes all movable articles except actionable claim and money • But includes shares and stocks. • Definition of Consideration • TCS on Gross Amount Received • Includes GST • Includes Freight, Insurance • Any other charges
- 13. Procedure • Deposit ofTCS • Within 7 days of the next month • Quarterly Statement • The seller required furnish Quarterly State in FORM 27EQ • Dues Dates: • Quarter ending 30th June 15th July • Quarter ending 30th September 15th October • Quarter ending 31st December 15th January • Quarter ending 31st March15th May • Late Fee: Rs.200 per day (Maxim : Amount of TCS) (Sec.234E) • Issue of TCS Certificate to the buyer • Form 27D – Due Date: 30th July, 30th October, 30th January, 30th May for respective quarters.
- 14. Other Issues • AutomobileSector • TCS is applicable to automobiles sector for selling of a Motor vehicle above Rs. 10 lakhs to the customer but it is not applicable from the manufacturer to the distributor, dealer or sub-dealer • The new provision of TCS is applicable to automobile sector also. • Manufacturer, Distributor, Dealer, or Sub Dealer • Sec.206C(1F) applicable only to B2C Transactions • Sec.206C(1H) is applicable to B2B Transactions
- 15. Not Applicable • ifthe buyer is liable to deduct tax at source under any other provision of this Act on the goods purchased by him from the seller and has deducted such amount. • The two noteworthy conditions are- • 1. The buyer is liable to deduct TDS, and • 2. The buyer has actually deducted the TDS. • Both conditions are required to be satisfied. • In the case of works contract, both the goods and services are involved. However, such a transaction is covered under section 194C and is subject to TDS thereunder. Hence, there shall not be any TCS on works contract only if the buyer has deducted the tax.
- 16. Receivables • CBDT shouldcome out with a clarification on applicability of TCS on Trade Receivables outstanding as on 30th September 2020 and received on or after 1-10-2020. • In case of collection of consideration for trade receivables as on 30.09.2020 (prior to 01.10.2020), the seller has to raise debit notes immediately on receipt of consideration of more than Rs. 50 Lakh. • In this case, if the seller receives the consideration, say on 30.10.2020, he has to deposit the amount of TCS by 7th November, 2020 even if the buyer does not pay the amount of TCS to the seller.
- 17. Sales Returns • Incase of sales return, credit or debit note may be issued which will ultimately reduce the amount receivable by the seller from the buyer. • TCS shall be collected on the net amount collected from the buyer. • If the sales return happens after the receipt of consideration and furnishing of TCS statement, the only option left to the seller is to file a correction statement and adjust the same with any subsequent TCS liability or claim refund of the TCS.
- 18. Miscellaneous • Branch Transfers •Stock Transfer is not sale of goods. Hence TCS not applicable • Job Work or Works Contract • Since the Job Work is covered under the provisions of Sec.194C • Contractors/Sub Contractors • TDS is applicable. • Hence TCS is not applicable
- 19. Sale of ImmovableProperties • Immovable properties Viz., land, buildings and flats • They are not goods – hence TCS not applicable • Jewellary • They are goods – TCS applicable • TDR/Lease – Relating to Immovable Propeties – TCS Not applicable • Slump Sale – TCS is not applicable
- 20. Delayed Payment byCustomers Interest Charged • Reference: Section 15(2)(d) of CGST Act • Transaction Value • Value of supply includes interest or late fee or penalty for delayed payment of any consideration for the supply. • Hence TCS is applicable on the above payments received from the customer
- 21. Shares and Stocks •Listed Shares • Sold through recognized Stock Exchanges - NO TCS • Sold through off-market – TCS applicable subject to threshold limit • Unlisted Shares • TCS is applicable subject to the threshold limit • Applicable only if the Seller is a Trader in dealing with Shares.
- 22. Bill Discounting bySellers • The transaction is a financial arrangement by the Seller from Bank • When the Bills are discounted with the Bank, the seller receives the amount which is in the form loan. • Hence TCS is not applicable in this regard.
- 23. Accounting for TCS •Include TCS in the Invoice • Issue Debit Note at the time of collection of Debtors from the Customer for the amount of TCS. • Liability is created for TCS by crediting, if it is included in invoice • TCS is credited when subsequently received at the time of collection of Debtors (if it was not included in the invoice)
- 24. New Companies • Newcompany / new business is started/commenced during the year 2020-21 • Criteria of Rs.10 in the previous year is not satisfied in this case • Hence TCS is not applicable for the entity for the year 2020-21.
- 25. Bad Debts Recovered •If it is an account of sale of goods earlier • The relation of Seller and Buyer persists. • TCS is applicable
- 26. Barter • If theconsideration is adjusted through accounting entries • Results in receipt of lesser amount • But there is no clarification by CBDT • On a safer side, if the sale of goods exceeds the threshold limit, TCS may be recovered in either of the case, i.e. the Buyer and Seller • The Receipt is treated as deemed receipt for both the seller and buyer
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