With effect from October 1, 2020, Section 206C(1H) of the Income-tax Act, 1961 has come into force which requires collection of tax by a seller, whose total sales, gross receipts or turnover in the preceding financial year exceeds Rs 10 crore. The tax shall be collected from the amount received as consideration for the sale of goods in excess of Rs 50 lakh in any previous year.
So if you are buying goods of more than Rs 50 lakh be ready to pay TCS on the same and claim the credit at the time of filing your income tax return.
In this article, we have touched upon 10 important key issues about this requirement.
1. Timing of collecting TCS
The tax should be collected at the time of receipt of amount from the buyer if the sale consideration received in a previous year exceeds Rs 50 lakh. There is no requirement to collect TCS on any sale consideration received before October 1, 2020.