{"id":88,"date":"2021-06-24T08:34:57","date_gmt":"2021-06-24T08:34:57","guid":{"rendered":"http:\/\/sdy.co.in\/blog\/?p=88"},"modified":"2021-06-24T12:26:00","modified_gmt":"2021-06-24T12:26:00","slug":"tcs-206c1h-vs-tds-194q","status":"publish","type":"post","link":"http:\/\/sdy.co.in\/blog\/tcs-206c1h-vs-tds-194q\/","title":{"rendered":"TCS 206C(1H) VS TDS 194Q"},"content":{"rendered":"\n

We have almost reached the end of Q1 of FY 21-22 It is a testing time for all businesses across the world on
account of the Coronavirus. We are all working and available to support our clients.<\/p>\n\n\n\n

\"We also request you to stay home and be safe\"<\/strong><\/pre>\n\n\n\n
As you are aware that from 01.10.20202 TCS 206C(1H) was made effective and from 01.07.2021 TDS 194Q shall be
applicable, we have summarised both the sections below along with vis-a-vis comparison & illustrations.<\/p>\n\n\n\n
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TCS SECTION 206C(1H)<\/strong><\/p>\n<\/div><\/div>\n\n\n\n
New TCS Section 206C(1H) is made effective from 01.10.2020 vide Finance Act, 2020 and it mandates that:<\/strong><\/p>\n\n\n\n
  • A seller of goods is liable to collect TCS on sale of any goods from buyer.<\/li>
  • TCS to be collected if the Aggregate value of goods is more than 50 lakhs.<\/li>
  • TCS to be collected on Total sale value.<\/li>
  • TCS @0.1% is to be collected on amount exceeding Rs. 50 lakhs if PAN of buyer is available.<\/li>
  • If the buyer does not furnish their PAN\/AADHAR number to the seller, then seller collect from the buyer, a sum equal of 1% in place of 0.1%<\/li><\/ul>\n\n\n\n
    Seller<\/strong>– A person whose turnover exceeds Rs. 10 Crores in during the financial year immediately preceding, the financial
    year in which the sale of good is carried out.
    Buyer<\/strong>– Any person who purchase any goods, except importer of goods Central\/State Government, Local Authority An
    embassy, High Commission, legation, commission, consulate, and trade representation of a foreign state. <\/p>\n\n\n\n
    ACCOUNTING JOURNAL ENTRIES<\/strong><\/p>\n\n\n\n
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    EXPLANATION<\/strong>
    A seller who receives any amount as consideration for sale of any goods. Then the Aggregate value of sale exceeding
    50 lakh rupees in any previous year shall collect a sum equal to 0.1% of the sale consideration exceeding 50 lakh rupees from the buyer at the time of receipt as Income Tax. This section becomes operative from 1st October 2020.<\/p>\n\n\n\n
    IMPACT OF CREDIT NOTE\/DEBIT NOTE<\/strong>
    If sales return\/credit note\/debit note is before receipt of any consideration, then the impact will be included in the
    amount of consideration. TCS will be applicable on the revised consideration. If the amount of consideration is already
    received and TCS is collected and paid, no impact will be made at the time of passing entry for sales return\/credit
    note\/debit note.<\/p>\n\n\n\n
    DUE DATE FOR RETURN<\/strong>
    The person responsible for collecting tax shall deposit the TCS amount within 7 days from the last day of the month in
    which the tax was collected. Every tax collector shall submit quarterly TCS return i.e., Form 27EQ in respect of the tax
    collected by him in a particular quarter.<\/p>\n\n\n\n
    PRACTICAL ISSUES<\/strong><\/p>\n\n\n\n
    • Issues shall arise at the end of each quarter is reconciliation. There would be some vendors who might not deposit<\/li>
    • TCS to the government and hence the purchaser might lose the credit of such TCS.<\/li>
    • Charging TCS becomes an issue where advances are received from customers. Since the liability of depositing TCS is on receipt of amount, TCS must be paid on such advance.<\/li>
    • If the dates of sales and payment receipt of goods are different than TCS is applicable on receipt of sale of goods.<\/li>
    • TCS is not applicable on Inter-Branch Stock Transfers, as PAN of both the customer and supplier is same.<\/li><\/ul>\n\n\n\n
      FEW EXAMPLES<\/strong>
      Case <\/strong>– Mr. A sales goods of Rs 6000000 to Mr. B (with PAN and Aadhar detail).
      Solution \u2013 In case it is cover under this section and we must pay tax on 10 lakh (60 lakh – 50 lakh) and rate of tax is 0.1%.
      Case <\/strong>\u2013 Mr. A sales goods of Rs 60 lakh to Mr. B (without PAN and Aadhar detail).
      Solution \u2013 It is also cover under this section and taxable amount is 10 lakhs, but rate of tax is 1% because here PAN and Aadhar details are not furnished.
      Case <\/strong>\u2013 Y sales goods to Z of Rs 60 lakh. Z is liable to deduct TDS.
      Solution \u2013 It is not covered under this section because according to section 206C (1H) the provision of this subsection shall not apply if the buyer is liable to deduct tax at source under any other provision of this act has deducted such amount.
      Case <\/strong>\u2013 Mr. X sales goods to Mr. Y and takes advance on 29.9.2020 but sale is made on or after 1.10.2020.
      Solution \u2013 Receipt is before 1.10.2020, but sale is taking place after 1.10.2020, TCS should be applicable.<\/p>\n<\/div><\/div>\n\n\n\n
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      TDS SECTION 194Q<\/strong><\/p>\n\n\n\n
      New TDS Section 194Q is made effective from 01.07.2021 vide Finance Act, 2021 and it mandates that:<\/strong><\/p>\n\n\n\n