TCS on Sale of Goods vs. TDS on Purchase of Goods

TCS on Sale of Goods VS TDS on Purchase of Goods

By admin TCS return, TDS return, TDS v/s TCS

TCS on Sale Of Goods	TDS on Purchase of Goods

1. This provision is governed by Section 206C(1H).	1. This provision is governed by Section 194Q of the Income Tax Act, 1964.
2. It is applicable from 1st October 2020.	2. It is applicable from 1st July 2021.
3. It is applied to sellers of goods whose sales or gross turnover exceeds Rs. 10 crores in the previous financial year.	3. It is applied to the buyer of goods whose sales or gross turnover exceeds Rs. 10 crores in the previous financial year.
4. The seller needs to deduct TCS at the rate of 0.1% on receipt of sale consideration for the sale of any goods whose value exceeds Rs. 50 lakhs. The rate of TCS is 5% if the buyer does not provide the PAN.	4. The buyer needs to deduct TDS at the rate of 0.1% of the purchase value of goods whose value exceeds Rs. 50 lakhs. The rate of TDS is 5 % if the seller does not provide the PAN.
5. This provision shall not apply if the transaction is covered by any other provisions of the Income Tax Act or if it is covered under section 194Q.	5. If the transaction is subject to TCS u/s 206C(1H), the buyer shall have the first obligation to deduct the tax.
6. TCS is to be done at the time of receipt of the amount.	6. TDS is done at the time when the amount is credited or paid whichever is earlier.

Section 194Q provides for TDS @0.1% if the payment is to be made to a “Resident Seller”. Hence in the case of import is done, the TDS u/s 194Q does not arise.
CBDT vide Circular No. 17 of 2020, clarified that provisions of Section 206C(1H) clarify that the word “goods” u/s 206C(1H) does not include securities that are traded in the Stock Exchange. Thus the question of TCS does not arise.
The term “Goods “refers to every type of movable property, thus the provisions of TDS do not apply to the purchase of immovable property by a developer.

These provisions are very confusing in practical life. There is an uncertainty whether the seller will collect the TCS or the buyer will deduct the TDS. Both the parties will have to rely on communication with each other from time to time.

Settlemytax specializes in providing various services on TDS filing and keeps you up to date with the new provisions and amendments introduced in the Finance Act.