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TDS 194Q
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TCS 206C(1H)
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Applicable on
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Purchase of Goods
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Sale of Goods
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Effective Date
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01st July, 2021
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01st October, 2020
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Who is responsible for TDS / TCS
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Buyer
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Seller
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Meaning of Buyer
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Buyer means a person
carrying on business whose total sales, gross receipts or turnover from the
business exceeds Rs.10 crores during the financial year immediately preceding
the financial year in which such goods are purchased. (For FY 2021-22,
turnover of buyer for the FY 2020-21 is to be considered)
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Buyer means a person who
purchases any goods, but does not include,-
a) Government, Embassy, High Commission, legation, consulate, trade
representation of foreign state b) Local Authority
c) Importer of the goods
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Meaning of Seller
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As defintion not explained in section 194Q, we can refer 206C:
A person whose total sales, gross receipts or turnover from the business carried
on by him exceed Rs.10 crore during the financial year immediately preceding
the financial year in which the sale of goods is carried out
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A person whose total sales, gross receipts or turnover from the business
carried on by him exceed Rs.10 crore during the financial year immediately
preceding the financial year in which the sale of goods is carried out
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When TDS / TCS will apply
(Trigger point)
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When payment(paid or
payable) to a seller for purchase of any goods of the value or aggregate of
such value exceeds Rs.50 Lakhs during the year.
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Seller shall at the time of
receipt of such amount, collect from the buyer, a sum equal to 0.10% of the
sale consideration exceeding Rs.50 Lakhs.
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Rate of TDS / TCS
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TDS @ 0.10 % of such sum exceeding Rs.50 Lakhs
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TCS @ 0.10% of the sales consideration received exceeding Rs.50 Lakhs
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Rate of TDS / TCS if PAN /
Adhaar not furnished
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As per 2nd Proviso to
section 206AA, in case deductee (Seller) does not furnish its PAN, then TDS @
5% will be applicable
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As per 1st Proviso to
section 206C(1H) read with section 206CC, in case collectee (Buyer) does not
furnish its PAN / Adhaar, then TDS @ 1% will be applicable.
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Effective date from which threshold limit of
Rs.50 Lakhs is to be considered
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Threshold limit of Rs.50 Lakhs shall be computed from 01/04/2021 (for
financial year 2021-22). It implies that if a buyer purchased goods of value
exceeding Rs.50 Lakhs up to 30/06/2021 from a seller then TDS under section
194Q shall apply on all purchases on or after 01/07/2021.
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Since section 206C(1H) was introduced by the Finance Act, 2020, w.e.f
01/10/2020. For the FY 2020-21, threshold of Rs.50 Lakhs shall be computed
from 01/04/2020. It implies that if a Seller had received consideration of
Rs.50Lakhs or more upto 30/9/2020 from buyer, TCS under 206C(1H) shall apply
on all consideration received on and after 01/10/2021.
For FY 2021-22, Threshold limit of Rs.50 Lakhs shall be computed from
01/04/2021 and TCS will be applicable as and when consideration
received (including any previous dues / advance payment) crosses Rs.50 Lakhs
limit.
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Treatment of Debit Note /
Credit Note issued, if any
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Since TDS is to be deducted
at the time of payment or credit, whichever is earlier for purchase of goods,
any adjustment on account of issue of debit note on purchase return /
otherwise should not have any impact on TDS.
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Since TCS is required to be
collected at the time of receipt of consideration, no question of credit note
arises. Any adjustment of debit note / credit note must have been done by the
buyer before making payment to seller.
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Whether TDS / TCS to be made on Including GST or
Excluding GST value
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No specific clarification / circular is issued in this regard.
Earlier in the year 2017 CBDT vide Circular No. 23/2017, gave
clarification for GST on Services, that if component of “GST on
services” is indicated separately, the TDS shall be deducted on the amount
paid or payable without including such “GST on services” component.
However recently in CBDT Circular No. 17/2020 dated 29/09/2020, it was
clarified that TCS U/s 206C(1H) is applicable on amount of sales
consideration and no adjustments on account of indirect taxes (including GST)
is required to be done.
Till the time any clarification is issued in this respect, applying the
principles of this recently issued circular for TCS, it is suggestible to
deduct TDS on including GST value, to avoid any litigation.
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CBDT Circular
No. 17/2020 dated 29/09/2020, it was clarified that TCS U/s 206C(1H) is
applicable on amount of sales consideration and no adjustments on account of
indirect taxes (including GST) is required to be done. So TCS is required to
be collected on value including GST amount.
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What if Buyer / Seller holds
multiple GSTINs
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Threshold limit of Rs.10
crore as well as Rs.50 Lakhs shall be computed annually on PAN basis and not
GSTIN basis
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Threshold limit
of Rs.10 crore as well as Rs.50 Lakhs shall be computed annually
on PAN basis and not GSTIN basis
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Time Limit to Deposit of TDS / TCS
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As per Rule 30 of Income Tax Rules, 1962, TDS shall be
deposited to the credit of Central Government electronically –
– On or before 7th day of subsequent month in which TDS is deducted, and
– Where TDS is deducted in March, due date of deposit is 30th April
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As per Rule 37CA of Income Tax Rules, 1962, TCS shall be
deposited to the credit of Central Government electronically –
– On or before 7th day of subsequent month in which TCS is collected.
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Interest levyon Failure to
Deduct / collect tax or payment of tax
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As per section 201(1A) –
If person responsible for deducting TDS fails to deduct or after deductions,
there is failure to pay tax to the government as required under the act,
simple interest will be payable as under
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As per section 206C(7)- If
the person responsible for collecting tax does not collect the tax or after collecting
the tax fails to pay tax to the government as required under the act,
simple interest will be payable as under –
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(i) Interest @ 1% for every month or part of the
month from the date on which such tax was deductible to the date on which
such tax is deducted; and
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(i) Interest @ 1% for every month or part of the
month from the date on which such tax was collectible to the date on which
such tax is deducted
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(ii) Interest @1.50% for every month or part of a month from the date on
which such tax was deducted to the date on which such tax is actually paid.
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Fee U/s 234E on delay in furnishing TDS / TCS
statement (Late Fee)
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Any delay in furnishing quarterly TDS Statement (Form 26Q), Late fee of
Rs.200/- per day will be payable for every day during which the failure
continues.
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Any delay in furnishing quarterly TCS Statement (Form 27EQ), Late fee of
Rs.200/- per day will be payable for every day during which the failure
continues.
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However the amount of late fee shall not exceed the amount of tax deductible.
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However the amount of late fee shall not exceed the amount of tax
collectible.
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Penalty for delay in / non furnishing of TDS /
TCS Certificates
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As per section 272A(2)(g) Any delay in furnishing TDS
certificate to deductee will attract penalty of Rs.100/- per day for every
day during which the failure continues. However the amount of penalty shall
not exceed the amount of tax deductible
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As per section 272A(2)(g) Any delay in furnishing TCS
certificate to collectee will attract penalty of Rs.100/- per day for every
day during which the failure continues. However the amount of penalty shall
not exceed the amount of tax collectible
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Penalty on Delay / Incorrect
furnishing of TDS / TCS statement
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In addition to late fee as
prescribed U/s 234E, Assessing Officer can levy penalty U/s 274H (which
ranges from minimum Rs.10,000/- to maximum Rs.1,00,000/-) for late /
incorrect furnishing of TDS statement.
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In addition to late fee as
prescribed U/s 234E, Assessing Officer can levy penalty U/s 274H (which
ranges from minimum Rs.10,000/- to maximum Rs.1,00,000/-) for late /
incorrect furnishing of TCS statement.
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Penalty for Failure to Deduct / Collect Tax
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As per section 271C – If any person fails to deduct the
whole or any part of the tax as required , then such person shall be
liable to pay, by way of penalty, a sum equal to the amount of tax which such
person failed to deduct or pay as aforesaid.
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As per section 271CA – If any person fails to collect
the whole or any part of the tax as required, then such person shall be
liable to pay, by way of penalty, a sum equal to the amount of tax which such
person failed to collect as aforesaid.
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Prosecution on Failure to
Pay Tax
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As per section276B – If a person fails to pay to
the credit of the Central Government – Any tax deducted at source by him, he
shall be punishable with rigorous imprisonment for a term which shall not be
less than 03 months but which may extend to 07 years and with fine.
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As per section 276BB – If a person fails to
pay to the credit of the Central Government, the tax collected by him as
required under the provisions of section 206C, he shall be punishable with
rigorous imprisonment for a term which shall not be less than 03 months but
which may extend to 07 years and with fine.
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Good .. Informative
Thank you