Tax Collected at Source(TCS) | Updated TCS in budget 2021 and TCS Rates

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Overview

Every annual budget brings some new changes for the tax professionals and taxpayers all over India. These changes influence the life of every taxpayer in one way or another. From Macro-economist, Income tax professionals, and middle-class taxpayers all wait for these amendments and analyze carefully how these changes are going to affect them?

Similarly, few new rules are introduced in budget 2021 for the convenience of taxpayers and to reduce the burden of TCS/TDS from all the taxpayers. Today, in this article we will learn about the updated TCS in budget 2021 for the FY 2021-22 and AY 2022-23. we will also learn about the major update in section 206CCA which describes the higher rates of TCS on taxpayers who don’t file for ITR when they are supposed to. 

We will also talk about the concessional TCS rates which were introduced during the COVID-19 and following the lockdown period from 14th June 2020 to 31st March 2021. all these new amendments will come into effect from 1st April 2021 and updates in section 206CCA will come into effect from 1st July 2021.

Updated TCS In Budget 2021 For FY 2021-22 And AY 2022-23

Concessional TCS rates that were introduced last year will come back to the normal or new updated TCS in budget 2021 for the FY 2021-22 and AY 2022-23. the last date for those concessions under TCS rates was 31st March 2021as stated under the Taxation and Other laws (relaxation and amendment of certain provisions) Act, 2020.

Many taxpayers haven’t filed for their ITR in years when they are eligible for these returns. To keep that in mind new higher TCS rates are proposed on the taxpayers who haven’t filled TCS for the last 2 years under section 206CCA according to the Income-tax Act, 1961. these higher TCS rate for the non-filers of ITRs was introduced in Union Budget 2021. however, none of these changes will affect the common who are filing their Income Tax Return on time every year.

Another new TCS provision is proposed for the sales of goods. If the TDS under section 194Q is applied on a transaction such as sales of goods then there would be no TCS will be applicable on those transactions under section 206C(1H) according to the TCS in budget 2021.

New TCS rates have been introduced on the sales of certain goods for the FY 2021-22 and AY 2022-23. We are giving you detailed information of the new TCS in budget 2021 along with their TCS section they fall under and the TCS deposit challan code in the below table.

TCS Deposit Challan Code TCS Section Sales of Goods TCS Rate
6CA 206C(1) Alcoholic liquor for human consumption 1%
6CB 206C(1) On the purchase of timber under a forest lease 2.50%
6CC 206C(1) On the purchase of timber from any other means except from the forest under lease 2.50%
6CD 206C(1) On the purchase of any other forest produces except the timber and tendu leaves 2.50%
6CE 206C(1) On the sales of Scrap 1%
6CF 206C(1C) On the purchase of parking lot 2%
6CG 206C(1C) On the purchase of toll plaza 2%
6CH 206C(1C) On the purchase of mining and quarrying and other operations 2%
6CI 206C(1) On the purchase of Tendu Leaves 5%
6CJ 206C(1) Minerals, being Coal or Ignite or Iron ore 1%
6CK 206C(1D) On the purchase of bullion and Jewellery NIL
6CL 206C(1F) On the purchase of motor Vehicle by any mode of payment 1%
6CM 206C(1E) Cash sales of any goods other than bullion and jewellery NIL
6CN 206C(1E) Providing any services other than Ch-XVII-B NIL
6CO 206C(1G) On the purchase of overseas tour packages 5%. TCS is applicable in the case of non-furnishing of PAN/Aadhaar
6CP 206C(1G) Remittance under LRS for education loan from financial institute that falls under section 80E 0.50%
6CQ 206C(1G) Remittance under LRS ( Except the purpose of purchasing tour and education loan packages from abroad from from the financial institution which falls under section 80E) 5%, TCS will be applicable only in case of non-furnishing of PAN/Aadhaar
6CR 206C(1H) Sales of goods 0.10%, TCS will be applicable in case of no-furnishing of PAN/Aadhar

Few Facts To Remember

1. TCS Rates on Non-Furnishing of PAN Under Section 206CC

In the table above we have mentioned several times the TCS rates for the sub-section in case of non-furnishing the PAN/Aadhaar. As per section 206CC, it is mandatory to provide the PAN or Aadhaar number to the collection on the sales of goods of the above items of any amount. The tax collected at source under Chapter XVII-BB buyer or assessee is supposed to present his/her PAN to the tax collector at Source. In the absence of a PAN card new and higher TCS will be collected according to the new TCS rate applicable 2021, which are as following:

(a) At twice the rate specified in the relevant provision of this Act

(b) Or at the rate of 5% according to the new TCS rules

2. TCS Rates For Non-filing Of ITR Under Section 206CCA

Higher TCS rates will apply on the non-filing of Income Tax Return (ITR) for the consecutive past 2 years. These new TCS rates applicable in 2021 will be according to the specified person who hasn’t filled the ITR under section 206CCA. Propose TCS in budget 2021 are as following for this section.

(a) Twice the rate specified in the relevant provision of the act

(b) Or the new TCS rate of 5% will be applied

3. TCS Rate In Absence of PAN and Non-Filing Of ITR

TCS rates will be double the new updated TCS rates if the specific person doesn’t have the PAN card under the provision of section 206CCof the Act apply for the transaction of item. The tax collected at Source or TCS will be higher according to both sections ( section 206CC and section applicable according to income tax for the specified person such as if the person hasn’t filled the ITR for 2 consecutive previous years or TDS or TCS is more than Rs. 50,000 in the last 2 years and so on)

4. Lower TCS Rates Due To COVID-19

In the wake of the novel Coronavirus, the govt of India had introduced new concessional rates on the transaction of many above items stated in the table under “the taxation and other laws (Relaxation and Amendment of Certain Provisions) Act, 2020. these items fall under the category of these sub-sections 206(1), (1C), (1F), and (1H). these concessions started on 14th May 2020 and ended on 31st March 2021. therefore TCS on any sale or purchase of these items till 30th March 2021 will be applied accordingly which is three-fourths of the new TCS in budget 2021.

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