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May 14, 2020

Revised TCS Rates applicable for Financial Year 2020-21 and Assessment year 2021-22 from 14th May 2020

Revised TCS Rates applicable for Financial Year 2020-21 and Assessment year 2021-22 from 14th May 2020

Tax collected at source (TCS) is the tax payable by a seller which he collects from the buyer at the time of sale. Section 206C of the Income-tax act governs the goods on which the seller has to collect tax from the purchasers. The person collecting the TCS/ seller is known as collector and the buyer is known as collectee. As per section 206C seller shall collect tax from buyer at the time of debiting the account or receipt of amount of buyer whichever is earlier.

The finance minister today has announced the 20 Lakh crore stimulus package in which it was announced that the current TCS rates shall be reduced by 25% from 14th May 2020 till March 31 2021. The Major Changes and new TCS section introduced in Finance Act 2020 with effect from 14th May 2020 are as under:

Section 206(1G) TCS on remittance:

Under the Liberalized remittance scheme the Reserve Bank of India allows resident individuals to remit a certain amount of money during a financial year to another country for investment or expenditure. Earlier no TCS was applicable if remittance was made abroad through authorized dealer but now the authorized dealer is required to collect TCS at the rate of 5% at the time of remittance of money if the amount of remittance is more than Rs. 7 Lakhs and in case the remittance is connected with educational loan then TCS at the rate of 0.5% is applicable where the amount of remittance is more than Rs. 7 Lakhs. In case the remitter is not having PAN or Aadhaar no then TCS must be collected at the rate of 10%.

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Section 206(1G) TCS on Overseas Tour Packages:

As per the finance act 2020, person who is the seller of tour package is responsible to collect TCS on overseas package and shall collect TCS on the total amount from the purchaser at the rate of 5% or 10 % in case the buyer does not furnish PAN or Aadhaar number. The amount includes expenses for travel or hotel stay or boarding and lodging.

Section 206(1H) TCS on export of Goods:

Every person, being a seller, who receives any amount as consideration for sale of any goods of the value or aggregate of such value exceeding Rs. 50 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 %. of the sale consideration exceeding fifty lakh rupees as income-tax. From 14th May 2020 till 31st March 2021, TCS rate 0.075% shall apply on export of goods.

The following are the rates of TCS different of goods specified as per section 206(1). Old Rate from 1 April 2020 to 13 May 2020. New Rate 14 May 2020 to 31 March 2020

Type of GoodsNew rateOld Rate
Section 206(1) Alcoholic liquor for human consumption0.75%1%
Section 206(1) Timber obtained by any mode other than under a forest lease1.875%2.5%
Section 206(1) Timber obtained under a forest lease1.875%2.5%
Section 206(1) Any other forest produce not being timber or tendu leaves1.875%2.5%
Section 206(1) Tendu leaves3.75%5%
Section 206(1) Scrap0.75%1%
Section 206(1) Minerals being lignite, coal and iron ore0.75%1%
Section 206(1F) Purchase of Motor vehicle exceeding Rs. 10 Lakhs0.75%1%
Section 206(1) Parking lot1.5%2%
Section 206(1) Toll Plaza1.5%2%
Section 206(1) Mining and Quarrying1.5%2%
Section 206(1G) Remittance (Liberalized remittance scheme) exceeding Rs. 7 Lakhs5%
(No Change)
5%
Section 206(1G) Overseas Tour Packages5%
(No Change)
5%
Section 206(1H) Sale of Goods exceeding Rs. 50 Lakhs0.075%0.1%

If the collectee does not furnish PAN to collector or furnishes incorrect PAN, then collector shall collect TCS at Double the rate specified OR 5% Whichever is Higher.

Who are sellers/ collector of TCS?

The following are the persons or organisation liable for collecting TCS:

  • Central Government
  • State Government
  • Local Authority
  • Statutory authority or corporation
  • Company
  • Partnership firms
  • Cooperative society
  • Any individual or HUF who has total sales/ gross receipts that exceeds the specified monetary limit as mentioned under section 44AB of the income tax act

Who is the buyer or collectee not liable for TCS?

The following are the persons or organization not liable for TCS:

  • Public sector entities or companies
  • Central Government
  • State Government
  • Embassy of High Commission
  • Consulate and Other trade representation of a foreign Nation
  • Clubs such as sports club and social clubs

Due dates for TCS quarterly Returns:

QuarterPeriodDue Date
Q11 April 2020 – 30 June 202015th July 2020
Q21 July 2020 – 30 September 202015th October 2020
Q31 October 2020 – 31 December 202015th January 2020
Q41 January 2020 – 31 March 202115th May 2021

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Due dates for TCS payment:

The due date payment for both government and non-government collectors is as under:

MonthDue date
April7th May 2020
May7th June 2020
June7th July 2020
July7th August 2020
August7th September 2020
September7th October 2020
October7th November 2020
November7th December 2020
December7th January 2021
January7th February 2021
February7th March 2021
March7th April 2021

Interest on late payment of TCS or failure to collect TCS:

In case the collector responsible for collecting tax at source does not collect it or after collecting fails to pay it to the Government, he shall be liable to pay simple interest at the rate of 1% per month or part thereof on the amount of such tax from the date on which such tax was collectible to the date on which the tax was actually paid and such interest shall be paid before furnishing the quarterly statement for each quarter.

Penalty for failure to collect TCS:

If any person fails to collect the whole or any part of the tax then such person shall be liable to pay by way of penalty as per section 271CA, a sum equal to the amount of tax which such person failed to

Exemption from payment of TCS:

  1. TCS in case of goods prescribed above shall not be applicable if goods purchased for personal consumption
  2. TCS is not applicable if buyer is resident and furnish declaration that such goods used in manufacturing of any article or power generation.

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