CBDT issues press release intimating the release of a new functionality “ITR Filing Compliance Check” which will be available to Scheduled Commercial Banks (SCBs) to check the IT Return filing status of PANs in bulk mode;
• In the wake up of COVID- 19 pandemic, Supreme court has issued detailed guidelines for limited physical hearings.
• The user guide provide detailed procedure for:
• E- nomination of counsel
• E- nomination of clerk
• E- application for special hearing pass
• E-submission for self declaration
• Section 10 of the Income Tax Act, 1962 states about incomes which should not be included in total income i.e. exempted income.
• The central government has notified “L&T Infra Debt Fund (PAN:AACCL4493R) for the purpose of Section 10 (47) for the assessment year 2018-19 and onwards with prescribed condition.
• Under Section 119 of the Income Tax Act, 1962, CBDT passed an order to assign the roles of Principal Chief Commissioners of Income Tax (Jurisdictional) and Principal Chief Commissioner of National e- Assessment Centre.
• Pr.CCIT (Jurisdictional) will be the cadre controlling authority, responsible for completion of disposal targets and accounted for day to day administrative matters and functioning of Faceless hierarchy except those assigned to Pr. CCIT (NeAC).
• Pr. CCIT (NeAC) will be responsible for overall implementation of Board’s policy and formulating guidelines and SOPs for the work to be done by various units.
• Under Section 119 of the Income Tax Act, 1962, CBDT passed an order to assign the roles of Principal Chief Commissioners of Income Tax (Jurisdictional) and Principal Chief Commissioner of National e- Assessment Centre.
• Pr.CCIT (Jurisdictional) will be the cadre controlling authority, responsible for completion of disposal targets and accounted for day to day administrative matters and functioning of Faceless hierarchy except those assigned to Pr. CCIT (NeAC).
• Pr. CCIT (NeAC) will be responsible for overall implementation of Board’s policy and formulating guidelines and SOPs for the work to be done by various units.
• Consequent upon implementation of “ Faceless Scheme”:
1.Transfer/ Posting of certain officer in the grade of Pr. Chief Commissioner of Income Tax/Pr. Director General of Income Tax, Pr. CCIT, Pr. DGIT haven been ordered on immediate basis on their promotion vide order no. 169.
2.Transfer/ Posting of certain officer in the grade of Chief Commissioner of Income Tax have been ordered on immediate basis on their promotion vide order no. 170.
3.Transfer/ Posting of certain officer in the grade of Principal Commissioner of Income Tax have been ordered on immediate basis on their promotion vide order no. 170.
• Section 10 of the Income Tax Act, 1962 states about incomes which should not be included in total income i.e. exempted income.
• The central government has notified a lists of “District Mineral Foundation Trust” for the purpose of Section 10 (46) for the assessment year 2018-19 to 2022-2023 along with specified incomes.
The Finance Minister, Smt. Nirmala Sitharaman has introduced the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Bill, 2020 (‘the Bill’) in the Lok Sabha on September 18, 2020. The bill seeks to give legal effect for the following:
(a) Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020
(b) Press Release, dated 13-5-2020 (reduction of TDS/TCS rates)
(c) Notification No. 35 /2020, dated 24-06-2020
(d) Notification No. 56/2020, dated 29-07-2020
Further, the Bill has also sought to amend various sections of the Income-tax Act, 1961. Section 6 has been proposed to be amended to provide clarity that concession in the period of stay in India, for an Indian Citizen and a Person of Indian Origin, shall be reduced from 182 days to 120 days only if he comes on a visit to India and his total income, other than income from foreign sources, exceeds Rs. 15 lakhs during the previous year.
Further a new explanation has been proposed to be added below Section 6(1A) to provide that the provision of deemed residency shall not be applicable if an individual becomes resident in India in the previous year as per clause (1) of section 6.
The total number of taxpayers who have opted for the Direct Tax Vivad Se Vishwas Act since its enactment is 35,074 through Form-1 (Declaration under the scheme) that have been submitted till 8 September 2020.
This was stated by Shri Anurag Singh Thakur, Union Minister of State for Finance & Corporate Affairs in a written reply to a question in Rajya Sabha today.
Giving more details, the Minister further said that the revenue generated till date through the Act is Rs. 9,538 crore.
This figure does not include the payments made by the taxpayers who are yet to file their declarations under the Scheme. The time-limit for filing of declaration under the scheme has been extended till 31 December 2020.
• CBDT clarifies there is no requirement of scrip wise reporting for day trading and short-term sale or purchase of listed shares.
• States that scrip wise details in the return of income for AY 2020-21 is required to be filled up only for the reporting of the long-term capital gains for those shares or units which are eligible for grandfathering.
• Further elaborates that if scrip wise long-term capital gain is available, it can be cross verified by the Department electronically with the stock exchange and there will be no need to subject these income tax returns to further audits or scrutiny.
BACKGROUND
• The rule 29B(1)(i) of Income tax Rules earlier entitled a banking company as specified in the clause, and fulfilling the conditions mentioned therein, to receive any such interest, or sum as specified in Section 195(1) of the Act without deduction of taxes.
• Such banking company was required to make an application for the above in Form 15C.
NOTIFICATION
• The notification makes an amendment to the Rule 29B to widen its scope to include any insurer, neither being an Indian company nor a company which has made the prescribed arrangements for the declaration and payment of dividends within India, and which carries on operations in India through a branch and satisfying the conditions as specified in the said rule.
• The notification also inserts an Explanation giving the meaning of an insurer as under:
“insurer” shall have the same meaning as assigned to it in sub-clause (d) of clause (9) of section 2 of the Insurance Act, 1939 (4 of 1938)
• An amended Form 15C is also provided by the notification.
In continuation of Transparent Taxation introduced by the Prime Minister of India on August 13, 2020, CBDT launches the Faceless Income Tax Appeals on the 25th September 2020.
• Key Features of the Scheme
• The entire process of appeals will be Automated, including e-allocation of appeal through Data analytics and IA, e-communication of notice/ questionnaire, e-verification/e-enquiry , e-hearing and finally e-communication of the appellate order, thus, dispensing with the need for any physical interface between the appellant and the Department.
• The Faceless Appeal will not only provide convenience and just and fair orders to the taxpayers, but will also impart greater efficiency, transparency and accountability of the IT department.
• The notification further lays down the complete procedure of an appeal, penalty proceedings and rectification proceedings under the Scheme.
• An appeal against an order passed by the NFAC under this Scheme shall lie before the Income Tax Appellate Tribunal having jurisdiction over the jurisdictional Assessing Officer.
• As per data, about 88% of the pending Appeals amounting to 4.05 lakh appeals, will be handled under this scheme. All appeals, with exception of appeals relating to serious frauds, major tax evasion, sensitive & search matters, International tax and Black Money Act, will be finalized under this faceless ecosystem.
• The scheme provides for the setting up of a National Faceless Appeal Centre(NFAC), Regional Faceless Appeal Centres (RFAC) and Appeal units, with their specific functions and jurisdictions, as enumerated in the Scheme, to facilitate the conduct of e-appeal proceedings, at different levels.
• All communications between the NFAC and the appellant or all internal communications between the NFAC, RFAC, the National e-assessment centers, the assessing officer and the appeal units shall exclusively be via electronic mode using digital signature.
• Further, All communications with the appellant shall be made via the registered account, registered email- address or by an authenticated copy on the appellant’s Mobile app, followed by a real time alert.
• The appellant shall file all responses through his registered account and they shall be deemed authenticated on receipt of an acknowledgement from the NFAC.
• No applicant shall not be required to appear personally or through authorized representative with connection to any appeal under this scheme. However, the appellant may request for a personal hearing, which may be approved by the Chief commissioner or director general of the RFAC, if circumstance of same is as specified.
• The Notification authorizes the Assistant Commissioner/Deputy Commissioner of Income-tax (National e-Assessment Centre) (headquartered at Delhi), to act as the Prescribed Income-tax Authority for the purpose of
• section 143(2) of the Act,
• in respect of returns furnished under section 139 or in response to a notice issued under 142(1) of the Act,
• for the purpose of issuance of notice under section 143(2) of the said Act.
• The notification comes into effect retrospectively from 13th August 2020.
• The notification no. 80, lists the Income-tax authorities of the National Faceless Appeal Centre (NFAC), as below:
1. Principal Chief Commissioner of Income-tax (NFAC), Delhi
2. Income-tax Officer (NFAC)(HQ), O/o Principal Chief Commissioner of Income-tax (NFAC), Delhi.
3. Commissioner of Income-tax (NFAC), Delhi
4. Income-tax Officer (NFAC)(HQ), O/o Commissioner of Income-tax (NFAC), Delhi
5. Additional /Joint Commissioner of Income-tax (NFAC), Delhi.
6. Deputy /Assistant Commissioner of Income-tax (NFAC), Delhi.
• The notification No. 81, lists the Income-tax authorities of the Regional Faceless Appeal Centre (RFAC)
• The CBDT directs that the above mentioned Income-tax authorities shall exercise the powers and perform functions, in order to facilitate the conduct of Faceless Appeal Proceedings, in respect of their scope specified in para 3 of the Faceless Assessment Scheme, with respect to appeals filed under section 246A(Appealable orders before the Commissioner) or 248(Appeal by a person denying liability to deduct tax in certain cases) of the Act, pending or instituted on or after 25.09.2020.
1. Threshold Criteria
• The threshold limit of five lakh rupees in case of individual/ Hindu undivided family (being ecommerce participant who has furnished his PAN/Aadhaar) to calculate the amount of sale or services or both for triggering deduction under section 194-0 shall be considered from 1st April 2020. Hence, if the gross amount of sale or services or both facilitated during the previous year 2020-21 (including the period up to 30th Sept 2020) exceeds five lakh rupees, the provision of section 194-0 shall apply on any sum credited or paid on or after 1st October 2020.
• The provisions of Section 206C(1H) shall not apply on any sale consideration received before 1st October 2020. Consequently, it would apply on all sale consideration (including advance received for sale) received on or after 1st October 2020 even if the sale was carried out before 1st October 2020.
• The threshold limit of fifty lakh rupees to calculate sale consideration for triggering provisions of TCS under section 206C(1H) shall be computed from 1st April 2020.
2. Sale of Motor Vehicle
• As per existing provision , section 206C(1F) shall apply on sale of motor vehicle for the value exceeding ten lakh rupees.
• TCS under 206C(1H) shall apply if sale consideration received from sale of vehicles to customer during the previous year exceeds fifty lakh rupees . However it is clarified that , the sale consideration received for sale of motor vehicle to customer for the value exceeding ten lakh rupees would not be subject to TCS under section 206C(1H) of the Act if such sales are subjected to TCS under section 206C(1F) of the Act.
3. No adjustment on account of sale return or discount or indirect taxes including GST is required to be made for collection of tax under section 206C(1H) of the Act since the collection is made with reference to receipt of amount of sale consideration.
• The Government has extended the due date for filing belated and revised tax return for the financial year 2018-19 from 30th September 2020 to 30th November 2020.
• CBDT has authorized Principal Director General of Income Tax (Systems) to upload information relating to GST returns on Form 26AS within 3 months of their possession of information .
• CBDT extends deadline for selection of cases for complete Scrutiny during the FY 2020-21 from September 30, 2020 to October 31, 2020.
• A bare perusal of the meaning of “international transaction” defined in section 92B(1) would show that a transaction would fall within the ambit of international transaction if, either or both the associated enterprises are non- resident.
• In the present case none of the AEs i.e. neither the assessee nor the domestic group companies with which the assessee had entered into transaction are non-residents. All the companies are domestic entities and are subject to tax under the provisions of the Act.
• Hence, it was held that the provisions of Section 92B (2) would not get attracted to such transactions prior to 01/04/2015 and these transactions would not be deemed to be International Transactions.
• The TPO has made an adjustment towards Arm’s Length Price (ALP) on account of interest chargeable on delayed receivable including the addition on the opening outstanding deferred receivables.
• It was held that
• The law only requires actual transactions to be at Arm’s Length and does not permit computation of Arm’s Length Price based on further notional transactions.
• Working Capital adjustment needs to be done to the impact of outstanding receivables on profit ability.
• Regarding details of opening outstanding receivables which were raised in previous Financial Years, the notional interest on the same, have already been added by respective Transfer Pricing Officers, in the assessment orders of relevant previous years in which such invoices were raised. ITAT have observed that the submissions of the Ld. DR and the calculations given during the hearing are not tenable.
• Assessees incurred expenditure on renovation of a house purchased pursuant to sale of land and claimed the said expenses as ‘exempt’ u/s.54F,
• Rejecting CIT(A)’s view, ITAT holds that “the amount spent on renovation of such residential house by an assessee according to his requirements is also allowable as exempt u/s.54F of the Act as it would amount to construction of a residential house”
• Madras HC allows a batch of assessees’ writs, quashes order passed by TPO on November 1, 2019 as barred by limitation of time prescribed u/s 92CA(3A) r.w.s. 153(1) [60 days prior to the date of completion of assessment, which ended on October 31, 2019] for AY 2016-17;
• Before HC, assessees’ contended that Sec 92CA(3A) categorically mentions that time limit for issuing TP-order falls anytime ‘before’ 60 days ‘prior to’ the date on which the time limit u/s153 expires, i.e., before 60 days prior to 31.12.2019 [33 months from the end of the relevant AY];
• Accordingly, working backwards, the 60th day prior to 31.12.2019 [i.e. 30.12.2019] falls on 1.11.2019 (counting 30 days in both November and December) and thus the time limit for passing TP-order should be at any time before 01.11.2019, i.e., on or before 31.10.2019; Assessees’ argued that since the impugned TPO’s order was passed on 1.11.2019, it was barred by limitation;
Assessee was assigned the responsibility to restructure the business of the Kirloskar Electric Company Ltd.
AO disallowed the claim of interest paid to financial institutions saying it is not debited in profit and loss account hence, capital expenditure and, the same is not in relation to earned income and assessed MAT profit without giving the benefit of indexation on sale of capital asset.
HC allowed the said interest expenditure saying that the purpose of any expenditure incurred must be making or earning the income. And assessee had invested in the fixed deposit to earn the income so that it can cover the cost of interest expenses and also, there is no other transaction in the year. Hence, there is relation between both the interest and allowed under section 57(iii).
With regards to MAT profit, HC grants indexation benefit while arriving at the MAT profit saying that by virtue of Section 115JB(5), application of the other provisions of the Act are allowed unless it is specifically barred by the section itself.
Section 54 of the Income Tax Act, 1962 gives certain exemption to the taxpayer in taxability of capital gain arising from the sale of capital asset if investment made in the residential house within the prescribed time.
ITAT denies the exemption under section 54 , just because investment made in the new residential flat is prior to the sale of the original capital asset.
Further, HC reversed the ITAT order, opined the said section itself does not make it mandatory to invest in new property out of the sale of original capital asset.
HC relies in the case of SH. Sanjeev lal that intention of the Legislature is to give relief to the taxpayer in the matter of payment of long-term capital gain tax.
• Section 40A(3) of the Income Tax Act, 1962 provide that any expenses made in cash to a person in a day if more than INR 20,000 must be disallowed.
• Under the case, the taxpayer argues that the expenditure made by him in cash, is in foreign currency and in abroad, since the said section provides the term “ rupee” , the same is not disallowed in his case.
• ITAT states that it would be impossible for the legislation to mention the currency of all the countries in the said section. However, it is possible that cash expenditure may be in different currencies in different countries.
• Hence, it upholds the disallowance the cash expenditure incurred by the taxpayer in cash even though it is in foreign currency.
Mumbai ITAT upholds invocation of Sec. 14A disallowance r.w. Rule 8D(2)(iii) on administrative expenses incurred by assessee with respect to its investment in group concerns and rejects the assessee’s contention that it had incurred administrative expenses purely for administration of its affairs and that no expenditure was incurred in respect of its investment in group concerns, remarks that “The investment does require constant monitoring even though it is made within the group concern”
However, with respect to the quantum of disallowance, since “Sometimes, the method applied as per rule 8D(2)(iii) gives absurd result, like the disallowance is more than the actual administrative expenses.
ITAT directs AO to arrive at the ratio of total administrative expenses to total income [including taxable and exempt income] and then apportion the administrative expenses to exempt income by applying such ratio
Simultaneously, ITAT directs AO to calculate 0.5% of the investment as per Rule 8D(2)(iii) [considering only investments earning exempt income] and then “compare the both method of calculation and in order to apply provision of section 14A, he should consider the amount calculated above said two methods whichever is less.”:
The assessee had entered into agreement with a company for conversion work on job work basis and paid conversion charges in cash as bank account of said company could not be operated because of order of attachment passed by ESI department
The assessing office made an addition of 20% of the total cash payment
The Madras HC has led that assessee is required to act as a prudent businessman, so that the job work is completed to his satisfaction with optimum quality. This has led the assessee to effect payments in cash.
It is to be noted that what is relevant to be seen insofar as Section 40A(3) is the conduct of the assessee and not the payee. The question would be did the assessee have a reasonable cause to effect payment in cash.
It may be true that merely because the payee is identifiable, it will automatically exonerate the assessee. We are not laying down any such broad principle. The fact that the payee was identifiable and not a fictitious person would go to show the bonafides of the transaction and this is what is required to be considered from the angle of a commercially expedient and prudent business house.
Madras HC dismisses Revenue’s appeal, upholds ITAT order allowing capital gains exemption benefit u/s. 54F to assessee-individual with respect to investment made in the residential portion of the property
subsequently let out the property for running a restaurant and further it had shown it as a commercial property in his wealth tax assessments
HC remarks that “There are several instances where residential properties are put to use for non-residential purposes and this cannot be a test to decide the nature of the property under the provisions of the Income Tax Act
in assessee’s case, where the letting out of the property for non-residential purpose was much after the purchase on 03.02.2011 and the lease agreement was on 21.03.2011
Further remarks that “So far as the Wealth-Tax assessment is concerned, it may be true that in the assessment, the property is shown as commercial complex, as on the relevant date, 31.03.2011, the property was leased out for commercial purpose.
Sec.272A(2)(k) provides for levy of penalty of Rs.100 per day of default upon failure “to deliver or cause to be delivered a copy of the statement within the time specified in section 200(3) or the proviso to section 206C(3).”
Bangalore ITAT directs AO to restrict penalty levy u/s.272A(2)(k) from the date of making ‘delayed’ TDS payment to the actual date of filing of e-TDS return
Though the assessee-company had deducted TDS timely, there was delay in remitting as well as furnishing the quarterly TDS returns, accordingly AO levied penalty u/s.272A(2)(k) computing the levy from the e-TDS return filing due date till the actual date of filing e-TDS return
Observes that the e-TDS return u/s 200(3) can only be filed after paying the taxes to the Central Government since the date of payment has to be filled in the return, notes that assessee was in acute shortage of money owing to recession in real estate business and huge losses incurred during the subject AYs due to which assessee could not pay TDS on time
Observes that up to the date of payment of TDS, separate penal provisions in Sec. 201(1A) [Interest on delayed remittance], Sec.271C [Penalty] and Sec.276B [Prosecution] exist, thus holds that “…the period levying the penalty has to be counted from the date of payment of tax
• The assessee (M/S HDFC Sales Private Limited) had made year end provision under different expenses head based on estimation of previous month’s expenditure
• The Assessing Officer (AO) disallowed the provision under Section 37 based on the contention that the provision was an ad-hoc provision as there was no scientific basis for making the provision of the expenses and the estimation projected was misleading. The AO further held that if there was certain liability, the assessee should have made TDS and in absence of TDS the provision was liable to be disallowed u/s.40(a)(ia).
• The Mumbai ITAT upheld the CIT(A) order deleting disallowance made u/s.37 in the hands of assessee.
• The CIT(A) opined that the assessee had made the provision based on the previous month’s expenditure and it clearly demonstrates that assessee made the provision after due diligence which cannot be said to be an ad-hoc provision and thus rejected the AO disallowance under Section 37.
• Further, the ITAT rejected the AO’s contention regarding disallowance under Section 40(a)(ia) and upheld the CIT(A)’s observation that no disallowance can be made in the context of section 40(a)(ia) as no payment was exactly identified or quantified.
• The assessee had sold a land and accounted for capital gains. The assessee invested the consideration received, in a residential house property. The residential house property was built on a commercial plot. Accordingly, the assessee had claimed the benefit under Section 54F.
• The Assessing Office (AO) rejected the deduction claimed under Section 54F on the ground that the plot on which the assessee made the construction was commercial in nature.
• The Jaipur ITAT rejected the AO’s claim and opined that the nature of plot whether it is commercial or agricultural or otherwise and whether assessee is residing in said house regularly is totally irrelevant as far as claim of deduction u/s 54F of the Act is concerned.
• It contended that the assessee is only required to have a construction on the plot for residential purpose and that condition had been fulfilled by the assessee by constructing two rooms with boundary wall and an iron entry gate on said plot which was not disputed either by AO or CIT(A). It further stated that whether plot on which house has been constructed is of commercial or agricultural nature, is all immaterial.
• Based on the above the ITAT ruled in favour of the assessee and allowed the benefit under Section 54F.
• Under section 2(22)(e), any sum paid by way of advance or loan to a shareholder holding more 10% shares in the company will be deemed dividend in the hands of shareholder to the extent of accumulated profits.
Facts of the case Question 1:
• Assessee is a shareholder in M/s Pinkcity Jewelhouse Pvt. Ltd. having 35% voting power. Assessee accepted allotment of 11,20,000 shares and paid the amount of Rs. 1,12,00,000 through various cheques.
• The journal entry for allotment of shares was passed in the books of company before presenting all the cheques for payment in bank. Thus, resulting in debit balance in the books of the company. AO made an addition on the debit balance in company’s books as loan given to Assessee under section 2(22)(e)
• As the company has not paid any sum as loan or advance to the shareholder and in fact amount is being debited is by way of Journal Entry. The debit balance has been notionally worked out by the assessing officer, by working out the balance in ledger account of shareholder on the basis of clearing date of cheque received (not paid) in the bank account, which is not correct. Thus provisions of section 2(22)(e) are not applicable.
• Erstwhile, the Section 56(2)(vii)(c) of the Income tax Act provides for the taxation of transfer of any movable property without consideration, where the aggregate fair market value of which exceeds fifty thousand rupees, or for a consideration which is less than the aggregate fair market value of the property by an amount exceeding fifty thousand rupees.
Facts of the case Question 2:
• The Assessee was allotted 11,20,000 shares @ Rs. 10/- per share by M/s Pinkcity Jewelhouse Pvt. Ltd. And further all the shareholders were allotted additional shares on proportional basis (Bonus Shares).
• ACIT determined the fair market value of the share at Rs. 20.37 per share and made an addition of Rs. 1,16,14,400/- being the difference calculated between fair market value and that of face value u/s 56(2)(vii)(c) of the Act.
• The ITAT ruled that issue of additional shares amounts to capitalization of profit by issuing-company and does not result into any additional gain in the hands of the shareholder as his wealth even after proportionate allotment of shares remain unchanged and thus, sec 56(2)(vii)(c), though per se applicable to the transaction of this genre, is not attracted in such a case.
• The term goods is not defined in the Income Tax Act, 1961.
• The meaning of goods should be understood in the commercial parlance
• Definition from other Acts can be referred
• To be collected at the time of receipt of consideration for sale of goods.
• when the aggregate receipts from a Buyer in a financial year is more than ` 50 lakhs & TCS on value exceeding ` 50 lakhs.
• Rate applicable is @ 0.1% (@0.075% for F.Y 2020-21) and 1% if PAN or Aadhar is not given by the Buyer.
• Sale of Goods that are already covered under any other provision of TCS
• Eg: Alcoholic Liquor, Tendu Leaves, Timber, Scrap , Minerals being coal, ignite or iron ore, Motor Vehicle etc.
• Transactions in foreign exchange through authorised dealers and Seller of overseas tour packages, which are covered under other TCS provision
• Goods exported.
• Transaction is subject to TDS and the Buyer deducts tax as per the TDS provisions under the Act.
• “seller” means a person whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the sale of goods is carried out,
• not being a person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein
• Tax to be collected on receipts of sales consideration and not at the time of sales made.
• In FY 2020-21 : for the purpose of ` 50 Lakhs exemption limit, the aggregate amount received from 01 April 2020 to be considered. Also, tax to be collected only on the receipts on or after 01 October 2020.
• For example, a seller who has received Rs. 1 crore before 1st October 2020 from a particular buyer and receives Rs. 5 lakh after 1st October 2020 would be required to collect TCS on Rs. 5 lakh only and not on Rs. 55 lakh [i.e Rs.1.05 crore – Rs. 50 lakh (threshold)] by including the amount received before 1st October 2020.
• No lower deduction certificate can be applied for this section
• TCS to be paid by 7th of subsequent month in which consideration is received.
• Non-compliance of this provision involves Interest and Penal Consequences.
• Tax needs to be collected on amount received in advance, if received after 1st October 2020.
• Receipts from customers are in installments- As per clarification by press release, TCS will be applicable on amount received for every installment.
• CBDT with the approval of Central government has power to issue guidelines and such guidelines are binding on the Tax officers and taxpayers.
• Guidelines for removing difficulties in giving effect to this new TCS provision.
Clarification by Circular No. 17 Dt. 29/09/2020
• TCS is not an additional tax but is in the nature of advance income-tax/TDS for which the buyer would get the credit against his actual income tax liability and if the amount of TCS is more than his tax liability, the buyer would be entitled for refund of the excess amount along with interest.
• No adjustment on account of sale return or discount or indirect taxes including GST is required to be made for collection of tax under section 206C(1H) of the Act since the collection is made with reference to receipt of amount of sale consideration.
• TCS provision shall be applicable on the amount of all sale consideration received on or after 1st October 2020 irrespective of the period in which the sale was made.
• TCS will be applicable only on the receipt exceeding Rs. 50 lakh received by a seller from a particular buyer.
