Tax on Collection @ Sale on Goods – Extended wef.Oct’20

The Government of India has introduced a new Section 206C(1H) of the Income Tax Act, 1961 with regards to “Tax Collection at Source”. Applicable to all sellers of goods whose turnover for the preceding Financial Years exceeds Rs. 10 Crores rupees.


If during FY 2019-20, turnover was exceeded ₹10 Crores, then For FY 2020-21 w.e.f 01.10.2020, this provision will apply to such sellers.

Applicable from 01.10.2020

1. Every seller who has received any amount as sale consideration above Rs. 50 lakhs has to collect additional 0.075% of bill amount, collect PAN and pay as TCS every month.

section 206c

2. TCS returns have to be filed as like TDS returns are filed.

3. So everyone is advised to complete accounting for half year till 30.09.2020 and separate parties with whom sale of Rs. 50 lakhs is made.

4. From every sale after 01.10.2020 to such parties levy 0.075% TCS in every bill and keep record of the same

Accordingly, sellers will need to add 0.075% to the bill value and deposit with the government on receipt of the payment from buyers.

tax collection at source

Exceptions:- Seller is not required to Collect TCS on all the Types of sales under Section 206C(1H) provided:

  • If the Goods are exported out of India
  • If the goods are of such type on which TDS is liable to be deducted by the buyer (Like in the case of Job Work, Composite Supply).
  • If the seller is liable to collect the TCS under any other clause of Section 206C. (Like in the case of Motor Vehicle dealer he shall collect the TCS on the motor vehicles if the value of the vehicle exceeds Rs. 10 Lac)
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