Budget 2020 introduced TCS on Sale of Goods u/s 206C(1H) w.e.f. 1^st October, 2020. This section cast an obligation on the seller to collect tax at source from the buyer. On the similar lines, budget 2021 introduced TDS on Purchase of Goods u/s 194Q. This section casts an obligation the buyer of the goods to deduct tax at source.

Section 206C(1H) w.e.f 1^st October, 2020:

1. Applicable to seller whose turnover exceeds Rs. 10 Crores during the preceding FY and sales to a buyer exceed Rs. 50 Lakhs during the current FY.
2. This section is applicable only in case of sale by a resident seller to a resident buyer.
3. TCS rate is collectible @ 0.10% of the sales above Rs. 50 lakhs to a particular buyer during the current FY. In case buyer does not provide PAN/Aadhar TCS is collectible @1%.
4. TCS is collectible at the time of receipt of consideration towards the sale of goods.

This section is not applicable in the following cases:

• Buyer is deducting or liable to deduct TDS under section 194Q or any other section.
• Export/Import of goods.
• Buyer is Central/State Government/ local authority.
• Goods are already covered under the existing provision of TCS

In case of TCS – the value for computing the TCS would be on invoice value including GST or any other tax.

Section 194Q applicable w.e.f 1^st July, 2021:

1. Applicable to a buyer whose turnover exceeds Rs. 10 Crores during the preceding FY and the purchases from a particular seller exceed 50 lakhs during the current FY.
2. This section is applicable only in case of sale by a resident seller to a resident buyer.
3. TDS is deductible @ 0.10% of the purchases exceeding Rs. 50 lakhs during the current FY.
4. TDS is deducted on credit or payment whichever is earlier.
5. TDS under section 194Q will not be applicable in cases where TDS/TCS is deducted or collected under any other section.
6. Where any transaction pertaining to goods attracts provisions of both TDS and TCS, then only TDS provisions would be applicable. Seller is not required to collect TCS.