Widening of TCS, TDS Net: Know where taxes to be collected, deducted

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October 1, 2020 10:25 PM

E-commerce operators are now required to deduct tax at source for facilitating any sale of goods or providing services through an e-Commerce participant.

income tax, tax deducted at source, TDS, tax collected at source, TCS, TCS on educational loan, TCS on overseas tour programme packages, TCS on sale of goods, TDS on e-commerce payments, PAN, AadhaarIn case the PAN/Aadhaar is not provided, a TCS rate of 10 per cent will be levied irrespective of the source of the education loan.

Starting from October 1, 2020, taxes are required to be collected or deducted on transactions of some goods and services as the Finance Act 2020 has widened the scope of Section 206C of the Income-tax Act, 1961, which deals with the collection of tax at source (TCS), to cover within its ambit transactions of foreign remittance through Liberalised Remittance Scheme (LRS), selling of overseas tour package as well as TCS on sale of goods over a limit.

Further, Section 194-O has been introduced in the Finance Act 2020, wherein e-commerce operators are now required to deduct tax at source for facilitating any sale of goods or providing services through an e-Commerce participant.

Introduction of TCS from October 1, 2020:

On repayment of education loan

Where the remittance is received by an authorised dealer under LRS u/s 206C(1G), a TCS rate of 0.375 per cent will be applicable till March 31, 2021 and 0.5 per cent thereafter on repayment of education loan of over Rs 7 lakh in a financial year (FY) from any financial institution as defined in section 80E. In case of a loan from other than financial institutions, the TCS rate will be 3.75 per cent till March 31, 2021 and 5 per cent thereafter.

In case the PAN/Aadhaar is not provided, a TCS rate of 10 per cent will be levied irrespective of the source of the education loan.

On overseas tour programme packages

On sale of the overseas tour programme packages, a TCS rate of 3.75 per cent will be levied till March 31, 2021 and 5 per cent thereafter u/s 206C(1G). The rate will be 10 per cent, in case PAN/Aadhaar is not provided.

On sale of goods

On sale of goods in excess of Rs 50 lakh in a financial year (excluding exports) by a seller – whose turnover is more than Rs 10 crore in the immediately preceding Financial Year – the TCS rate u/s 206C(1H) will be 0.075 per cent till March 31, 2021 and 0.1 per cent thereafter.

However, the goods shall not include those goods which are subject to TDS as per sub – section (1), (1F) or (1G) of section 206C.

In case the PAN/Aadhaar is not provided, the TCS rate will be 1 per cent.

“However, the provisions of the TCS sections shall not apply if a buyer is the Central Government, a State Government, an embassy, High Commission, legation, commission, consulate and the trade representation of a foreign State, local authority, etc,” pointed out Dr. Suresh Surana, Founder, RSM India.

Introduction of TDS from October 1, 2020:

On e-commerce payments

On payments by an e-commerce operator to e-commerce participants u/s 194-O, the TDS rate will be 0.75 per cent till March 31, 2021 and 1 per cent thereafter. Only for individuals and HUFs, the threshold limit for applicability of TDS is Rs 5 lakh, while there is no limit for others.

In case the PAN/Aadhaar is not provided, the TDS rate will be 5 per cent.

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