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Finance Act, 2020 has introduced a new provision under Section 206C(1H) related to Tax Collected at source (TCS) on Sale of Goods, Section 206C(1G)(a) for TCS on Foreign remittances through liberalized remittance scheme and 206C(1G)(b) on selling of overseas tour package w.e.f. 1st October, 2020.
As per new provisions if Seller of any goods whose turnover in the preceding financial year exceeds Rs.10 crore then he shall be liable to collect TCS @ 0.1% (rate will be 0.075% till 31st March, 2021) from 1st October, 2020 of the sales consideration from the buyer if buyer purchases goods for the amount exceeding Rs.50 lakhs (This limit is applicable separately for each buyer). This Provision is not applicable for sales consideration received up to 30th September, 2020.
This provision has come up with many new questions and doubts which need to be resolved. Thus, Webtel Experts have addressed all these queries in their recently published videos.
As per the RBI regulations, under Liberalized Remittance Scheme, Any resident individual can remit freely upto $250000 during the financial year for any permissible current and capital account transactions. Person is still eligible to use this limit. However, TCS shall be applicable to beyond a certain limit of remittances.
An authorized dealer receiving an amount or aggregate amount of Rs. 7 lakhs or more in the financial year for the remittances out of India under the liberalized remittance scheme of RBI shall be liable to collect TCS from a buyer remitting such amount out of India at the rate of 5%. In case PAN/ Aadhaar are not available, the rate will be 10% instead of 5%.
This provision is not applicable to following persons as given below:-
The Seller of Overseas Tour Package is liable to collect on receiving the amount from any buyer, being a person who purchases overseas tour packages, at the rate of 5%.
There is no monetary limit specified for this transaction, for any amount, TCS shall be collected by the Seller of that package.
This section is not applicable to following persons as given below:-
These amendments in the provision of section 206C, widening the scope of TCS to include the foreign remittances, sale of overseas tour packages and sale of goods. The taxpayers will be required to make necessary changes in the invoice or receipt vouchers to facilitate the TCS collection. Changes in the ERP/ Operating software required may also be considered to keep a check on threshold/receipt etc.
To know more about TCS/TDS updates, or TDS Software or TCS Software, drop an email to firstname.lastname@example.org