11 July 2024
If a buyer's PAN is not linked with Aadhaar, the seller is required to collect TCS (Tax Collection at Source) at a higher rate of 5% on the gross amount of sale of goods exceeding ₹50 lakhs in a financial year. This higher rate is applicable under Section 206C(1H) of the Income Tax Act, 1961. Here are the key points to note:
1. **Applicability**: The higher TCS rate of 5% applies only when the buyer's PAN is not linked with Aadhaar and the gross amount of sale of goods or services by the seller exceeds ₹50 lakhs in the financial year.
2. **TCS Collection**: As a seller, you are required to collect TCS at the rate of 5% on the amount received or receivable from the buyer for sale of goods. This amount should be separately charged on the invoice issued to the buyer.
3. **Threshold Limit**: The threshold limit of ₹50 lakhs is calculated on a cumulative basis for all transactions with the buyer during the financial year. Once this threshold is crossed, TCS at the rate of 5% becomes applicable on subsequent transactions until the end of the financial year.
4. **PAN-Aadhaar Linkage**: It's important to verify the PAN-Aadhaar linkage status of the buyer before collecting TCS. If the buyer's PAN is linked with Aadhaar, the regular TCS rate as applicable under Section 206C(1) or (1F) will apply, depending on the nature of the transaction.
5. **Reporting**: Ensure that the TCS collected is reported correctly in your TCS return (Form 27EQ) filed with the Income Tax Department. The return should accurately reflect the TCS collected at the higher rate in cases where PAN is not linked with Aadhaar.
If you encounter scenarios where the buyer's PAN is not linked with Aadhaar, ensure compliance with the TCS provisions as per the Income Tax Act and consult with a tax professional for specific guidance tailored to your business transactions.
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