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TCS applicable only on amounts received on or after Oct 1: CBDT

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Tax. (IANS Infographics)

The Central Board of Direct Taxes (CBDT) on Wednesday clarified that Tax Collection at Source (TCS) will be applicable only on the amount received on or after October 1, 2020 and a seller would be required to collect TCS only if his turnover exceeds Rs 10 crore in the last financial year.

Moreover, export of goods has been exempted from the applicability of the provisions of TCS.

The Finance Act, 2020 has amended the provisions relating to TCS with effect from October 1 to provide that seller of goods shall collect tax at the rate of 0.1 per cent (0.075 per cent up to March 31, 2021) if the receipt of sale consideration from a buyer exceeds Rs 50 lakh in the financial year.

The CBDT said TCS has been made applicable to the amount received from October 1 onwards and not before it. A CBDT circular issued on Monday has also stated that TCS shall be applicable only on the amount received on or after October 1.

For example, a seller who has received Rs 1 crore before October 1 from a particular buyer and receives Rs 5 lakh on or after the cut-off period would be required to collect tax 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 October 1.

The provisions relating to TCS were introduced in the Income Tax Act in 1988. Currently, TCS provisions are applicable on various transactions and rate of TCS varies from 1 to 5 per cent. The TCS collected is treated as advance tax payment/TDS for the taxpayers and he is allowed credit against his actual tax liability and excess amount of TCS, if any, is refunded to the taxpayer, along with interest.

The provisions of TCS also empower the CBDT to issue guidelines. Under it, the guidelines issues on September 29, inter alia, exempted certain transactions such as transactions carried through recognised stock exchanges/clearing houses and sale of fuel to non-resident airlines and also clarified method of computation of threshold, applicability of these provisions on motor vehicle sale, adjustment of sales return, discount, etc.

The CBDT has said that TCS applies only in cases where receipt of sale consideration exceeds Rs 50 lakh in a financial year. As the threshold is based on the yearly receipt, it has also been clarified that only for the purpose of calculation of this threshold of Rs 50 lakh, the receipt from the beginning of the financial year, i.e., from April 1, 2020 shall be taken into account.

For example, in the above illustration, the seller has to collect tax on receipt of Rs 5 lakh after October 1, 2020 because the receipts from April 1, 2020, i.e. Rs. 1.05 crore exceeded the specified threshold of Rs 50 lakh.

The CBDT further said that the seller in most of the cases maintains a running account of the buyer in which payments are generally not linked with a particular sale invoice. Therefore, in order to simplify and ease the compliance of the collector, it has been clarified that this TCS provision shall be applicable on the amount of all sale consideration received on or after October 1, without making any adjustment for the amount received in respect of sales made before this date.

Mandating the collector to identify and exclude the amount in respect of sales made up to September 30 from the amount received on or after October 1 would have resulted into undue compliance burden for the collector and also litigation, the CBDT said.

The CBDT said that this TCS shall be applicable only on the receipt exceeding Rs 50 lakh by a seller from a particular buyer. Therefore, on payment of Rs 1 crore made by a buyer to a particular seller, only Rs 5,000 (i.e. 0.1 per cent of Rs 1 crore – Rs 50 lakh shall be collected). However, the seller would be collecting Rs 3,750 only as the tax rate is reduced to 0.075 per cent till March 31, 2021.

Hence, in case of a person making payment of Rs 1 crore each to 10 different sellers, the total tax collected shall be only Rs 50,000 (i.e. Rs 37,500 this year) i.e 10 into [0.1 per cent of (Rs. 1 crore- Rs 50 lakh)] on the total payment made for purchase of Rs 10 crore to 10 different sellers.

The CBDT said that assuming a net profit of 8 per cent on sales, his business income in respect of this payment of Rs 10 crore made for purchase would be around Rs 87 lakh. The income tax liability on the income of Rs 87 lakh for an individual in new taxation regime would be around Rs 27 lakh. Hence, the amount of TCS collected, i.e. Rs 50,000 (Rs 37,500 this year) would be a miniscule part of his actual tax liability and would be easily adjusted against his tax liability. If the tax liability is less than Rs 50,000 (Rs 37,500 this year), the tax payer shall be entitled for a refund of excess TCS with interest.

It is pertinent to note here that currently, all sellers (except individuals and Hindu undivided family) are required to collect TCS without any threshold of turnover. In case of individuals and Hindu undivided family, the requirement of collection of TCS is applicable if their turnover exceeds Rs 1 crore in business or Rs 50 lakh in profession. Similar provisions exist for the applicability of Tax Deduction at Source (TDS).

It may also be mentioned that in order to reduce the compliance burden, these new provisions are made applicable to only those sellers whose business turnover exceeds Rs 10 crore.

The CBDT said that there are only around 3.5 lakh persons who have disclosed business turnover of more than Rs 10 crore in FY 2018-19 whereas active deductors/collectors as on date is more than 18 lakh. Therefore, the collection under these new provisions would be required to be made by very few persons who in most of the cases would already be complying with the existing provisions of TDS/TCS, it said.

Business

E-tailers begin 2nd festive sale round after 7-day fiesta

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E-taliers begin 2nd festive sale round after 7-day fiesta.

After registering record sales in the seven-day period to kick off the festive season after pandemic-induced lockdowns, ecommerce marketplaces like Amazon and Flipkart have announced the second round of online sales to keep up the momentum.

Amazon on Saturday announced �Happiness Upgrade Days’ where customers will get special offers on a wide range of products across categories from top brands till October 28.

The e-commerce platform is offering up to 40 per cent off on latest smartphones from top brands, 65 per cent off on large appliances and TVs and Up to 80 per cent off on Amazon fashion and home and kitchen products.

The sale brings over 6,000 deals on consumer electronics and accessories, up to Rs 30,000 off on laptops, up to 75 per cent off on headphones and up to 60 per cent off on camera devices, the company said in a statement.

“The customers can save big with a 10 per cent instant bank discount on Axis Bank, Citibank and ICICI Bank credit and debit cards and EMI transactions.

They can get 5 per cent instant discount plus up to 5 per cent reward points with Amazon Pay ICICI Bank credit card.

Flipkart has also started Dussehra sale from October 22 till October 28 and after that, the ecommerce platform will begin the �Big Diwali Sale’.

According to industry reports, the seven-day sales likely witnessed over $4.8 billion (nearly Rs 35,273 crore) in sales.

According to Bengaluru-based market research firm RedSeer, $3.1 billion (about Rs 22,000 crore) of goods were sold online from brands and sellers in the first four-and-a-half days of the online sales event that started from October 15.

Online retailers are expected to generate approximately $6.5 billion (Rs 47,751 crore) in sales during the festive month (October 15-November 15), with around 5.5-6 crore online buyers participating, according to a Forrester report.

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Business

Data is fuel, 5G fabric for digital transformation: Michael Dell

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Michael-Dell

Reiterating that technology has never been more central than it is in the pandemic times, Dell Technologies chairman and CEO Michael Dell has said digital transformation is like a machine with data as its fuel and 5G as its digital fabric.

Announcing the new Project Apex as-a-service offering, Michael Dell said that as we talk about the digital transformation, “my hope is that we are also seeing a human transformation with more kindness, generosity, and empathy”.

“We’ve needed all of that because in the last eight months, we’ve also revealed hard truths, some hard to watch, and hard to live through, as the fault lines of our society are laid bare, in access to healthcare, to education, to opportunity, and to justice,” he said during the company’s virtual conference this week.

“We are going to need all of that kindness and generosity and empathy going forward to help bridge these divides and make good on the promise of a brighter future”.

In a bid to help customers and partners on their digital transformation journey in the pandemic times, Dell Technologies announced a Cloud Console that will provide customers a single interface to manage multi-cloud, on-premise and edge deployments.

The Cloud Console is part of a new ‘Project Apex’ as-a-service strategy that aims to simplify how customers access Dell’s capabilities across storage, servers, networking, hyper-converged infrastructure, PCs and architectural offerings.

“We are committed to delivering all of our products and solutions as a service in an effort we’re calling Project Apex; so you can consume solutions, any way you want, pay-as-you-use, pay-as-you-go or subscription,” the Dell Technologies CEO said during the opening keynote.

Directionally, Project Apex will be Dell Technologies’ North Star. The new Dell Storage as a Service is an on-premises portfolio of scalable and elastic storage resources that will be available first in the US in the first half of next year.

In a nutshell, Dell’s flexible on-demand pricing, multi-cloud management and similar plans will be built into ‘Project Apex’.

“As everything in the physical world becomes intelligent and connected, the amount and relevance of data will continue to explode. The data era is here and to win organisations need to accelerate the digital transformation,” Michael Dell emphasised.

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Business

Steady oil prices holds up any reversion in petrol diesel prices

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The pump prices of auto fuels petrol and diesel remained unchanged on Saturday as softer global crude and product prices prevented oil marketing companies from carrying out any revision in prices.

With this, Petrol prices have now been unchanged for 32 days at a stretch while diesel prices were the same for the 22 consecutive days.

Price of petrol in the national capital stood at Rs 81.06 per litre. In Mumbai, Chennai and Kolkata, the fuel was sold for Rs 87.74, Rs 84.14 and Rs 82.59 per litre, respectively.

Diesel prices in Delhi, Mumbai, Chennai and Kolkata continues to be at Rs 70.46, Rs 76.86, Rs 75.95 and Rs 73.99, respectively.

Oil sector experts said that with global oil prices under pressure from slowing demand in the second wave of Covid-19 pandemic sweeping several western countries, crude price could fall in coming days. If this holds on for a week or so, there could be positive gains for auto fuel consumers in India by way of a fall in retail price of petrol and diesel.

Global crude prices are holding close to $42 a barrel now. It has been hovering between $40-42 a barrel for over a month now. But with lower oil demand and rising inventory, there is fear among oil producing companies that crude prices may start falling again.

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