The following changes in TCS-related provisions were amended by Finance ACT 2023:-
1. Section 206C(1G) – Change in TCS rate w.e.f 1st July 2023.
- TCS rate on remittances in excess of Rs. 7 Lakh, made for medical and educational purposes is kept at 5%.
- TCS rate on remittances in excess of Rs. 7 lakh, made for educational purposes out of loan obtained from financial institution, is 0.5%.
- TCS rate for all other remittances under Liberalised Remittance Scheme (LRS) and overseas tour package is enhanced to 20%.
2. Section 206AB & 206CCA – Exclusion of specified category from non-filers of tax return w.e.f 1st April 2023
These sections provide for Higher TCS/TDS rate for non-filer of ITR but there are certain persons who are not obliged to file tax return in India i.e. non-resident with no PAN and persons notified by the government. W.e.f. 1 April 2023 it is proposed to exclude such persons from the ambit of this Section and provide relief from a higher TDS/TCS rate.
A complete list of TCS (tax collected at source) rates along with related transactions and budget proposals for the financial year 2023-24 (AY-2024-25) is provided in the table given below.-
TCS Rate Chart for FY 2022-23 (AY 2023-24)
|Section||Nature of transaction||TCS rate applicable for FY 2023-24|
|206C(1)||Sale of Alcoholic liquor for human consumption||1%|
|206C(1)||Sale of Tendu Leaves||5%|
|206C(1)||Sale of ||2.5%|
|206C(1)||Sale of timber obtained by any mode other than under a forest lease||2.5%|
|206C(1)||Sale of any other forest produce not being timber or tendu leaves||2.5%|
|206C(1)||Sale of scrap||1%|
|206C(1)||Minerals, being coal or lignite or iron ore||1%|
|206C(1C)||Grant of licence or lease etc of Parking lot||2%|
|206C(1C)||Grant of licence or lease etc of Toll Plaza||2%|
|206C(1C)||Grant of licence or lease etc of Mining or quarrying||2%|
|206C(1F)||Sale of a motor vehicle of the value exceeding Rs. 10 Lakh||1%|
|206C(1G)||Foreign Remittance under Liberalised Remittance Scheme of Reserve Bank of India exceeding Rs. 7 Lakh , If the remittance is a loan obtained from any financial institution as defined in section 80E, for the purpose of pursuing any education||0.5%|
|206C(1G)||Foreign Remittance under Liberalised Remittance Scheme of the Reserve Bank of India exceeding Rs. 7 Lakh , if the remittance is for the purposes of education or medical treatment||5%|
|206C(1G)||Other Foreign Remittances under Liberalised Remittance Scheme (LRS) and overseas tour package||Upto 30.06.2023= 5%|
w.e.f 1.7.2023 = 20%
|Sale of goods in excess of Rs. 50 Lakh in a year by a seller whose turnover is more than Rs. 10 Crore||0.1% ((w.e.f 1-10-20)|
(1) Section 206C(1H) after introduction of section 194Q in budget 2021 (applicable from 1.7.2021)
- In case of both sections 206C & 194Q, limit of turnover is 10 crore, TDS/TCS rate is 0.1% for transaction above 50 lakh only on value exceeding 50 lakh But 194Q is for buyer point of view for deducting TDS and 206C is for seller point of view for collecting TCS.
- In case both seller & buyer have turnover above 10cr. then 194Q will be given preference hence buyer is required to deduct TDS, and seller will not be liable to deposit TCS. Hence 194Q will be preferred over 206C.
Both these provisions are distinguished in the below table:
|Conditions||194Q-TDS on purchase of goods||206C(1H)-TCS on Sale of goods|
|Who is liable for deduction/collection||Buyer is liable to deduct the tax||Seller is liable to collect the tax|
|Turnover limit of deductor or collector||The total sales, gross receipts or turnover of the buyer from the business should exceed Rs. 10 crores during the financial year immediately preceding the financial year in which such goods are purchased||The total sales, gross receipts or turnover of the collector from the business should exceed Rs. 10 crores during the financial year immediately preceding the financial year in which such goods are sold|
|Threshold limit of purchase/sale||If the value of purchase exceeds Rs. 50 lakhs||If the value of sales exceeds Rs. 50 lakhs|
|Amount on which tax to be deducted/collected||On the amount of purchase in excess of Rs. 50 lakhs||On the amount of sale consideration in excess of Rs. 50 lakhs|
|Time of deduction/collection||At the time of credit or payment, whichever is earlier||At the time of receipt|
|Preference to be given||Purchaser is first liable to deduct the tax if the transaction could be subject to both provision||Seller shall be liable to collect the tax only if the purchaser is not liable to deduct the tax or purchaser failed to deduct tax|
(2) Section 206CCA inserted by budget 2021:-
- Section 206CCA provides special provision for collection of tax at source for non-filer of income tax return at higher of the following TDS rates which is applicable for non-filer of ITR –(a) twice the rate specified in the relevant provision of the Act; or (b) the rate of 5%
- Upto FY 21-22, The provision of 206AB is applicable to a person who has not filed the returns of of income for both of the two assessment years relevant to two previous years immediately prior to the previous year in which tax is required to deducted, for which the time limit of filing return of income under section section (1) of section 139 has expired. AND aggregate of TDS & TCS in his case is Rs 50000 or more in each of these two previous years. The specified person shall not include a non-resident who does not have a permanent establishment in India.
- ((W.e.f 1st April 2022, specified person” shall mean a person who has not furnished the return of income for the assessment year relevant to the previous year immediately preceding the financial year in which tax is required to be deducted, for which the time limit for furnishing the return of income under sub-section (1) of section 139 has expired and the aggregate of tax deducted at source and tax collected at source in his case is Rs. 50000/- or more in the said previous year)
- (W.e.f 1st April 2023, e certain persons who are not obliged to file tax return in India i.e. non-resident with no PAN and persons notified by the government, are proposed to be excluded from the ambit of this Section (ie. 206CCA & 206AB) and provide relief from a higher TDS/TCS rate.)
(3) TCS Rate if valid PAN not furnished:-
As per section 206CC, if the buyer does not furnish his PAN (or Aadhaar No.) to the seller, then the rate of TCS shall be higher of-(a) twice the prescribed rate, or(b) 5 per cent except for TCS on Sale of goods in excess of Rs. 50 Lakh in a year by a seller whose turnover is more than Rs. 10 Crore for which 5 per cent is substituted with 1 per cent.
(4) Surcharge on TCS:-
- Surcharge is not to be added in rate of TCS in case of resident individual/ HUF /Firm/LLP/ AOP / BOI/Domestic Company.
- In case of Non-resident & Foreign company, Surcharge is to be added in the rates of TCS at the following rates.
Non Residents other than company (if income exceeds Rs. 50 Lakh but not exceeds Rs. 1 Crore) 10% Non Residents other than company (if income exceeds Rs. 1 Crore) 15% Non Resident companies if income is between Rs. 1 Crore and 10 Crore 2% Non Resident companies if income is greater than Rs. 10 Crore 5% Surcharge on Co-operative Society & Firms in case of Non-Residents (if income exceeds Rs. 1 crore) 12%
(5) Education Cess & SHEC on TCS:-
- EC & SHEC is not to be added in rates of TCS in case of resident Individual/HUF/Firm/ AOP/ BOI/ Domestic Company.
- Education Cess @ 2% & SHEC @ 1% is deductible at source in case of non-residents and foreign company.