FAQs for TCS (Tax Collected at Source)
Tax collected at source (TCS) is the tax payable by a seller which he collects from the buyer at the time of sale of goods.
It is new provision under section 206C of Income Tax Act. It is applicable when the total gross receipts or turnover in the previous year was more than Rs.10 crores. This provision is applicable to from 01-10-2020.
Electricity has been considered as “Goods” in the context of the central Sales Tax by the Apex Court and also in the context of the GST Law. Hence, TCS is applicable on Sale of Electricity w.e.f. 1st October 2020. Thus, as per the provision MSEDCL is liable to collect TCS from consumers.
As per the provision introduced in the Finance Act 2020, if the seller of any goods whose turnover in the immediately preceding FY exceeds Rs.10 Crores, he will be liable to collect TCS from the buyer.
TCS will be deducted from a person when the receipts of sale consideration are more than Rs. 50 lac from that person. The receipt shall be for the sale of goods.
TCS is applicable with effect from 1st October 2020.
The rate of TCS on goods u/s 206C is 0.1% of receipts above Rs. 50,00,000. But up to 31st March 2021, the rate is reduced by 25%. Thus the effective rate up to 31st March 2021 is 0.075%. When the PAN and Aadhar of the deductee are not available, the rate will be 1%.
Sale is calculated based on PAN of a consumer.
If an individual has multiple consumer numbers with the same PAN, value of sale is considered on the basis of PAN of the consumer.
In such cases the combined collection of these accounts will be considered as sale for TCS.
If a consumer does not provide his PAN or Aadhar Number the rate of TCS shall be 1% instead of 0.075%.
For example if a consumer has registered PAN/Aadhar on MSEDCL and his bill is Rs.60 Lakhs for the FY 2020-21 then he will be charged 0.075% on 10 Lakhs which equals to Rs.750 as TCS. However if he has not registered his PAN/Aadhar then he will be charged 1% on 10 Lakhs which equals to Rs.10,000 as TCS for the year