- TDS on purchase of goods section 194Q v/s TCS on Sale of goods Section 206C
(1H)
- What is TDS (Tax Deducted at Source)?
- The TDS stands for the Tax Deducted at Source. As per the Income Tax Act, any company or person making a payment is required to deduct TDS (Tax Deducted at Source) if the payment exceeds certain threshold limits. TDS needs to be deducted at the rates prescribed by the tax department.
- What is TCS (Tax collection at source)?
- Tax collection at source (TCS) is an extra amount collected as tax by a seller of specified goods from the buyer at the time of sale over and above the sale amount and is remitted to the government account.
- Provisions for TDS on Purchase of Goods Under Section 194Q and TCS (Tax Collected at Source) on sale of Goods under section 206C(1H)
- Section 194Q says: ‘Any person, being a buyer who is responsible for paying any
sum to any resident (hereafter in this section referred to as the seller) for
purchase of any goods of the value or aggregate of such value exceeding 50 lakh
rupees in any previous year, shall, at the time of credit of such sum to the
account of the seller or at the time of payment thereof by any mode, whichever
is earlier, deduct an amount equal to 0.1%. of such sum exceeding fifty lakh
rupees as income-tax.’
What is Section 206C (1H)?- “Every person, being a seller, who receives any amount as consideration for the sale of any goods of the value or aggregate of such value exceeding 50 lakh rupees in any previous year, other than the goods being exported out of India or goods covered in sub-section (1) or sub-section (1F) or sub-section (1G) shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 0.1 percent of the sale consideration exceeding fifty lakh rupees as income-tax”.
- That
means, that Every seller who has received any amount as sale consideration
above Rs. 50 lakhs (limit
to calculate from 1st April, 2020) has to collect 0.075% of bill amount from
such buyer, collect PAN and pay as TCS every month.
TDS on Purchase V/S TCS on Sale
Conclusion
Accounting for all of your taxes is important. If TDS has been deducted from your income, you may be eligible for a refund as long as your tax returns are submitted on time. In order to maintain the efficient and legal operation of your business, you should make it a priority to deposit any TCS that you have collected with the appropriate authorities. You can lower your taxes as an individual by using alternative strategies including tax deductions from investments in life insurance, mutual funds, and other tax-saving instruments.
