VIA Taxation and Corporate Law Forum organised a session on “New TDS/TCS Provision effective from 01.10.2020” on Zoom.
Eminent Speaker of the city, CA Naresh Jakhotia, Treasurer of VIA shared the scope of Tax Collection at Source (TCS) is set to increase tremendously w.e.f 01.10.2020. Now, every seller having turnover in the FY 2019-20 of more than Rs. 10 Crore will be required to collect Tax at Source @ 0.075% if the value or aggregate value of sale to any buyer during the year exceeds Rs. 50 Lakhs, he spoke.
Though the provision is introduced with the aim to deepen and widen the tax base, none of the purpose will be served, he demonstrated with examples. The benefit of reduction by 25% is not available if the PAN/Adhar of the buyer is not available with the seller and in such case the TCS rate would be 1%, he elaborated. He covered the issue of applicability of TCS on the amount of GST, Advance money as well. He emphasized the mechanism for proper implementation of the New TCS system for its better compliances.
He concluded that the introducing the system of collecting TCS at the time of billing would ensure better compliances but it is subject to few other lacuanes. To overcome this, he advised the members to pay the TCS also on the book debts balance outstanding as on 30/09/2020 @ 0.075% if such amount is individually more than Rs. 50 Lakh. He also discussed veriaous other consequences if taxpayer opts to pay TCS at the time of billing. He appealed to CBDT to come out the FAQ to cover various issues involved. Exports of the goods will be outside the TCS provisions, he informed.
He cleared lot many confusions & controversial issues invoved in the process of implementations of TCS provisions.
He informed about the Applicability of TCS provision as applicable only on Seller of Goods if the Turnover of seller is more than Rs. 10 Cr in previous financial year. Service/job work is outside the net of TCS, he informed. He also elaborated about the mode of reckoning & counting the limit of Rs. 10 Cr for seller and Rs. 50 Lakh for buyers. By linking the TCS with the receipt of money, even the TCS would be reflected in the year in which there may not have been purchases. Its going to involve lot fo reconcillation issues. Even buyer who are not buying goods for personal purpose or not for sale will be hit by this provisions. He suggested number of precautions and care that one need to take while complying with the TCS provisions. Amount exceeding Rs. 50 Lakh only will be liable for GST and so if a person receives Rs. 52 Lakh against sale consideration, only Rs. 2 Lakh will be liable for TCS, he explained.
In normal course, TCS/TDS arises at the time of payment or billing whichever is earlier. However, TCS liability u/s 206C(1H) is arising at the time of “Receipt of Sale Consideration” and not at the time of billing. The seller will be required to set a system in place to ensure its proper compliances, he informed.
While replying to TCS to be done on GST, he informed the CBDT’s Circular No. 23/2017 dated July 19, 2017 as applicable to the TDS provision is not applicable to TCS provisions. Furhter, FAQ issued earlier in the context of TCS & judgment of MP HC in case of Vinod Rathore (278) ITR (122) mandates TCS on GST components as well.
No GST is to be charged on TCS, he infrmed. Further. Sales made to public sector companies which are substantially or wholly owned by the central government or state government will also be subject to TCS. He further discussed the applicability of TCS on the amount of freight, loading/unloading, packing, etc charges on the invoice.
Tax collected during the month will be required to be deposited in Challan No 281 within a period of 7 days of next month & Seller will be required to file the quarterly TCS returns in Form no. 27EQ within 15 days from the end of the quarter. Sellers will be required to issue the TCS certificate in Form no 27D to the buyers, he informed.
He concluded by saying that Section 206C(1H) is sure to add lots of complications in its implementation. There would be a lot of reconciliation issues that would arise as a result of this new section 206C(1H). Buyers may face the music of the income tax department as purchase may be in different financial years and payment may be in different financial years. TCS would be reflected in the PAN of the buyer at the time of its payment to the seller whereas purchases would be forming the part of its financial statements at the time of billing. It would be in the interest of the taxpayers if CBDT takes note of all such issues and issues FAQ so as to remove all the possible areas of controversies and litigation.
Earlier, Suresh Rathi, President – VIA, in his welcome address welcomed the guest speaker and said we had organised this session at a very short notice and see tremendous response from industrialists and professionals. CA Ashok Chandak, Chairman of VIA Taxation & Corporate Law Forum gave his welcome address and briefed about the New TDS/TCS Provision. CA Sachin Jajodia, Convener, VIA Taxation and Corporate Law Forum conducted the proceedings and introduced the speaker.
The programme was largely attended by members, professionals and interested persons and took advantage of the programme. Prominently present were Pravin Tapadia, Past President of VIA, CA Mahendra Jain, CA Jethalal Rukhiyana, Rakesh Surana, CA Parikshit Loya, Satish Sarda, Girish Deodhar, Govind Mantri, Ashit Sinha, Pankaj Bakshi, Nishtha Khandelwal. Participants from other Madhya Pradesh, Chhattisgarh, Bilaspur, Chandrapur were also joined.