Our some customers cross the limit of TCS Rs.50 Lakh in current Financial year. And our some ledger have a balance receivable with customer as on 30-09-2020.
We had been starting to charge the TCS on customer invoice whose receivable amount more than 50 Lakh in current financial year.
Now, i want to know about that, should we charge TCS on balance receivable from customer as on 30-09-2020?
06 July 2024
No, you should not charge TCS (Tax Collected at Source) on the balance receivable from customers as on 30-09-2020. TCS is applicable on the receipt of consideration for sale of goods or provision of services, exceeding Rs. 50 lakhs in a financial year.
Here’s why you shouldn't charge TCS on the balance receivable:
1. **Point of Taxation**: TCS is triggered at the time of receipt of the consideration for the sale of goods or provision of services. It is not applicable on amounts outstanding or receivable as of a particular date, such as 30-09-2020.
2. **Financial Year Consideration**: TCS is applied on transactions occurring within the current financial year where the aggregate receipt from a customer exceeds Rs. 50 lakhs. It does not retrospectively apply to outstanding amounts from previous financial years or as of a specific date.
3. **Legal and Practical Considerations**: Charging TCS on balances as of 30-09-2020 would not comply with the legal requirements of the TCS provisions under the Income Tax Act, which focus on transactions and receipts within the current financial year.
Therefore, TCS should be applied prospectively on invoices issued and payments received during the current financial year, once the customer’s aggregate transactions exceed the threshold of Rs. 50 lakhs. Ensure compliance with TCS provisions as per the Income Tax Act and consult with a tax advisor if needed for specific circumstances.
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