Sec 206C As amended
This query is : Resolved
04 April 2020
PROVISIONS OF SEC 206C AMENDED CAN IT BE APPLIED WHERE THE SELLER OF BUYER HAS DEDUCTED TAX AT SOURCE UNDER ANY OTHER PROVISIONS OF THE INCOME-TAX ACT;
Kindly read the following and revert:
The Provisions of Section 206C as per Finance Act 2020:
95. In section 206C of the Income-tax Act with effect from the 1st day of October, 2020,—
(I) after sub-section (1F), the following sub-sections shall be inserted, namely:—
…………………………..
(1H) 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 fifty 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 per cent. of the sale consideration exceeding fifty lakh rupees as income-tax:
Provided that
if the buyer has not provided the Permanent Account Number or the Aadhaar number to the seller, then the provisions of clause (ii) of sub-section (1) of section 206CC shall be read as if for the words “five per cent.”, the words “one per cent.” had been substituted:
Provided further that
the provisions of this sub-section shall not apply, if the buyer is liable to deduct tax at source under any other provision of this Act on the goods purchased by him from the seller and has deducted such amount.
This is introduced as per Memorandum explaining provisions is only to widen and deepen the tax net. Further the explanations goes further to state that “ NO SUCH TCS TO BE COLLECTED IF THE SELLER IS LIABLE TO COLLECT TCS UNDER OTHER PROVISIONS OR THE BUYER IS LIABLE TO DEDUCT TDS UNDER ANY PROVISION OF THE ACT AND HAS DEDUCTED SUCH AMOUNT.
We can also interpret the provisions like " that the the buyer need not collect TCS on goods purchased by him from the seller " Provided that the provisions of this sub-section shall not apply, if the buyer is liable to deduct tax at source under any other provision of this Act and has deducted such amount." BECAUSE OF THE EXPLANATIONS OFFERED IN THE MEMORANDUM EXPLAINING THE PROVISIONS OF THE BILL AS STATED HEREINABOVE.
As per Section 206C of the Act which provides for the collection of tax at source (TCS) on business of trading in alcohol, liquor, forest produce, scrap etc. Sub-section (1) of the said section, inter-alia, provides that every person, being a seller shall, at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the buyer of certain goods a sum equal to specified percentage, of such amount as income-tax.
A seller of goods is liable to collect TCS at the rate of 0.1 per cent on consideration received from a buyer in a previous year in excess of fifty lakh rupees. In non-PAN/ Aadhaar buyer is liable to deduct TDS under any provision of the Act and has deducted such amount
THERE ARE EXEMPTED TRANSACTIONS Viz., : The provisions of Section 206C(1H) is not applicable if the buyer is liable to deduct tax at source under any other provision of this Act on the goods purchased by him from the seller and has deducted such amount Under the Chapter XVII – BB,
The Memorandum of Objects as per the provisions of the Memorandum Explaining the provisions of the Bill, this amendment is with an intent to widen the tax base and to bring the buyers into the tax net. In a case where buyer is required to deduct TDS and has deducted so, it only captures the seller into tax net but not the buyer. The whole intent of the objective is defeated by the exemption provided and the law and the memorandum of self-contradicting in nature
Hence, the seller / buyer if he is deducting tax under any other provisions of CH XVII, is this amendment is NOT applicable. THIS IS ONLY AN OPINION.
Further, in order to widen and deepen the tax net, it is proposed to amend section 206C to levy TCS on sale of goods above specified limit, as under: • A seller of goods is liable to collect TCS at the rate of 0.1 per cent. on consideration received from a buyer in a previous year in excess of fifty lakh rupees. In non-PAN/ Aadhaar cases the rate shall be one per cent. • Only those seller whose total sales, gross receipts or turnover from the business carried on by it exceed ten crore rupees during the financial year immediately preceding the financial year, shall be liable to collect such TCS. • Central Government may notify person, subject to conditions contained in such notification, who shall not be liable to collect such TCS. • No TCS is to be collected from the Central Government, a State Government and an embassy, a High Commission, legation, commission, consulate, the trade representation of a foreign State, a local authority as defined in Explanation to clause (20) of section 10 or any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to conditions as prescribed in such notification. • No such TCS is to be collected, if the seller is liable to collect TCS under other provision of section 206C or the buyer is liable to deduct TDS under any provision of the Act and has deducted such amount.
HENCE THE MEMBERS MAY INTERACT PLEASE
Kindly read the following and revert:
The Provisions of Section 206C as per Finance Act 2020:
95. In section 206C of the Income-tax Act with effect from the 1st day of October, 2020,—
(I) after sub-section (1F), the following sub-sections shall be inserted, namely:—
…………………………..
(1H) 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 fifty 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 per cent. of the sale consideration exceeding fifty lakh rupees as income-tax:
Provided that
if the buyer has not provided the Permanent Account Number or the Aadhaar number to the seller, then the provisions of clause (ii) of sub-section (1) of section 206CC shall be read as if for the words “five per cent.”, the words “one per cent.” had been substituted:
Provided further that
the provisions of this sub-section shall not apply, if the buyer is liable to deduct tax at source under any other provision of this Act on the goods purchased by him from the seller and has deducted such amount.
This is introduced as per Memorandum explaining provisions is only to widen and deepen the tax net. Further the explanations goes further to state that “ NO SUCH TCS TO BE COLLECTED IF THE SELLER IS LIABLE TO COLLECT TCS UNDER OTHER PROVISIONS OR THE BUYER IS LIABLE TO DEDUCT TDS UNDER ANY PROVISION OF THE ACT AND HAS DEDUCTED SUCH AMOUNT.
We can also interpret the provisions like " that the the buyer need not collect TCS on goods purchased by him from the seller " Provided that the provisions of this sub-section shall not apply, if the buyer is liable to deduct tax at source under any other provision of this Act and has deducted such amount." BECAUSE OF THE EXPLANATIONS OFFERED IN THE MEMORANDUM EXPLAINING THE PROVISIONS OF THE BILL AS STATED HEREINABOVE.
As per Section 206C of the Act which provides for the collection of tax at source (TCS) on business of trading in alcohol, liquor, forest produce, scrap etc. Sub-section (1) of the said section, inter-alia, provides that every person, being a seller shall, at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the buyer of certain goods a sum equal to specified percentage, of such amount as income-tax.
A seller of goods is liable to collect TCS at the rate of 0.1 per cent on consideration received from a buyer in a previous year in excess of fifty lakh rupees. In non-PAN/ Aadhaar buyer is liable to deduct TDS under any provision of the Act and has deducted such amount
THERE ARE EXEMPTED TRANSACTIONS Viz., : The provisions of Section 206C(1H) is not applicable if the buyer is liable to deduct tax at source under any other provision of this Act on the goods purchased by him from the seller and has deducted such amount Under the Chapter XVII – BB,
The Memorandum of Objects as per the provisions of the Memorandum Explaining the provisions of the Bill, this amendment is with an intent to widen the tax base and to bring the buyers into the tax net. In a case where buyer is required to deduct TDS and has deducted so, it only captures the seller into tax net but not the buyer. The whole intent of the objective is defeated by the exemption provided and the law and the memorandum of self-contradicting in nature
Hence, the seller / buyer if he is deducting tax under any other provisions of CH XVII, is this amendment is NOT applicable. THIS IS ONLY AN OPINION.
Further, in order to widen and deepen the tax net, it is proposed to amend section 206C to levy TCS on sale of goods above specified limit, as under: • A seller of goods is liable to collect TCS at the rate of 0.1 per cent. on consideration received from a buyer in a previous year in excess of fifty lakh rupees. In non-PAN/ Aadhaar cases the rate shall be one per cent. • Only those seller whose total sales, gross receipts or turnover from the business carried on by it exceed ten crore rupees during the financial year immediately preceding the financial year, shall be liable to collect such TCS. • Central Government may notify person, subject to conditions contained in such notification, who shall not be liable to collect such TCS. • No TCS is to be collected from the Central Government, a State Government and an embassy, a High Commission, legation, commission, consulate, the trade representation of a foreign State, a local authority as defined in Explanation to clause (20) of section 10 or any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to conditions as prescribed in such notification. • No such TCS is to be collected, if the seller is liable to collect TCS under other provision of section 206C or the buyer is liable to deduct TDS under any provision of the Act and has deducted such amount.
HENCE THE MEMBERS MAY INTERACT PLEASE
11 April 2020
The seller is not required to Collect tax (TCS) if the buyer has deducted Tax (TDS) under any other provision of Income Tax on such purchases
11 April 2020
Thank you very much for your response. I wanted to advise my client and though I was confident, I wanted to be mor doubly careful about this.
11 April 2020
Can we read like this "The seller is not required to Collect tax (TCS) on auxh purchases if the buyer has deducted Tax (TDS) under any other provision of Income Tax"
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Read more at: https://www.caclubindia.com/experts/details.asp?group_id=2789304
13 April 2020
Yes you can read it like this
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