OCTOBER 2020

GST Updates

1. E Way Bill will be Blocked if GST Taxpayer fail to file GSTR-3B from 15 October 2020

Blocking of E-Way Bill (EWB) generation facility for taxpayers with AATO over Rs 5 Cr., after 15th October, 2020 In terms of Rule 138 E (b) of the CGST Rules, 2017, the E Way Bill generation facility of a person is liable to be restricted, in case the person fails to file their GSTR-3B returns, for a consecutive period of two months or more.

As you might be aware that the GST Council in its last meeting has decided that this provision will be made applicable for the taxpayers whose Aggregate Annual Turn Over (AATO, PAN based) is more than Rs 5 Crores.

To avail continuous EWB generation facility on EWB Portal, you are therefore advised to file your pending GSTR 3B returns immediately.

GST Taxpayers who \will not be affected are;

1. - You are not registered on the EWB portal or
2. - You have already filed your GSTR-3B Return for August, 2020 or
3. - Your AATO (PAN based) is below Rs 5 Cr.

1. E Way Bill will be Blocked if GST Taxpayer fail to file GSTR-3B from 15 October 2020

2. CBIC vide Circular No. 142/12/2020- GST dated October 09, 2020 issued clarification relating to application of sub-rule (4) of rule 36 of the CGST Rules, 2017 for the months of February, 2020 to August, 2020.

2. New functionalities made available for TCS and Composition taxpayers

Taxpayers shall reconcile the ITC availed in their FORM GSTR-3Bs for the period February, 2020 to August, 2020 with the details of invoices uploaded by their suppliers of the said months, till the due date of furnishing FORM GSTR-1 for the month of September, 2020. The cumulative amount of ITC availed for the said months in FORM GSTR-3B should not exceed 110% of the cumulative value of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37 of the CGST Act, till the due date of furnishing of the statements in FORM GSTR-1 for the month of September, 2020.

Tax period	Eligible ITC as per the provisions of Chapter V of the CGST Act and the rules made thereunder, except rule 36(4)	ITC availed by the taxpayer (recipient) in GSTR – 3B of the respective months	Invoices on which ITC is eligible and uploaded by the suppliers till due date of FORM GSTR-1 for the tax period of September, 2020
Feb, 2020	300	300	270
March, 2020	400	400	380
April, 2020	500	500	450
May, 2020	350	350	320
June, 2020	450	450	400
July, 2020	550	550	480
August, 2020	200	200	150
TOTAL	2750	2750	2450

Effect of cumulative application of rule 36(4) on availability of ITC. Maximum eligible ITC in terms of rule 36 (4) is 2450 + [10% of 2450] = 2695. Taxpayer had availed ITC of 2750. Therefore, ITC of 55 [2750-2695] would be required to be reversed as mentioned in para 3.4. above. ITC Reversal required to the extent of 55.

3. All Updates and highlights of the 42nd GST Council Meeting

1. - GSTR1 and GSTR3B which is to be filed quarterly by the taxpayer whose turnover is less than Rs 5 crores from 1st January 2021, although challan is the medium by which payment is to be made.
2. - The facility of only upload outer supply of invoices will be given for the assessee for filing the quarterly returns as mentioned above.
3. - The assessee whose average turnover of higher than Rs. 5 Crores, HSN code needs to be written at a 6-digit level while HSN code to be mentioned at a 4-digit level for those whose average turnover is less than Rs. 5 Crores executing B2B supplies.
4. - From 1st January 2021, a refund will be given to those whose bank account validate with PAN and Aadhar. However, the application for refund can be signed via OTP of Aadhar verification.
5. - Satellite launch services are to be released to support start-ups building satellites.
6. - On 12th October 2020, another meeting will be ruled out for the consideration to states with the shortfall of revenue to reach on a decision.
7. - The centre can acknowledge developing a GoM rather that a council of administrators on the subject of compensation cess to address the extension of the cess levy.

Income tax updates

1. FAQ on Three New TCS Provisions from 1 October 2020 with Examples

Tax collected at source (TCS) is the tax payable by a seller which he collects from the buyer at the time of sale. Section 206C of the Income-tax act governs the goods on which the seller has to collect tax from the purchasers. The Income-tax Act mentions the particulars of goods on sale of which tax needed to be collected from the purchasers. The person collecting tax has to obtain Tax collection Account Number and quote it in all challans, certificates and returns or all other documents pertaining to the transactions. The buyer shall provide his Permanent Account Number (PAN) to the seller, failing which, higher tax shall be collected at the higher rate (twice or 5 percent whichever is higher).

2. Following Three new Categories of Transactions have been introduced with effect from 01/10/2020 for TCS

1. 1) Remittance out of India under Liberalised Remittance Scheme (LRS) of RBI.

   a. Tax is to be collected by bank/ foreign exchange dealer if he receives sum in excess of Rs 7,00,000 or more in aggregates from buyers being a person remitting such amount out of India, at the rate of 5%,
   
   b. In non-PAN/Aadhaar cases the rate shall be 10%

2. 2) TCS on selling of overseas tour package

   a. A seller of an overseas tour program package who receives any amount from any buyer, being a person who purchases such package, shall be liable to collect TCS at the rate of 5%.
   
   b. In non-PAN/ Aadhaar cases the rate shall be 10%.
   
   c. There is no monetary limit for this transaction, irrespective of any amount TCS must be collected by seller of that package

3. 3) Sale of goods

   Seller of the Goods whose turnover during the preceding FY exceeded Rs. 10 Crore and receives Rs. 50 Lakhs or more from a Domestic buyer of the goods has to collect TCS @ 0.1% (in case of non-PAN/Aadhar @ 1%) of the amount received (including GST) (TCS rate has been reduced to 0.075% for the period 1st October 2020 to 31st March 2021).

Miscellaneous updates:

Key Highlights of RBI Monetary Policy on 9 October 2020

The Reserve Bank of India (RBI), also known as the Apex Bank of India was established as India’s central bank to regulate the issue of banknotes and the keeping of reserves with a view to securing monetary stability in India and generally to operate the currency and credit system of the country to its advantage and to formulate a modern monetary policy framework to meet the challenge of an increasingly complex economy. The primary objective of the monetary policy is to maintain price stability while keeping in mind the objective of growth.

Reserve Bank of India (RBI) governor Shaktikanta Das on 9th October announced RBI’s monetary policy decision after three days of deliberations of its monetary policy committee (MPC). The MPC decided to continue with the accommodative stance of monetary policy until necessary (at least during the current financial year and into the next year), to revive growth on a durable basis and to mitigate the impact of COVID-19, while ensuring that inflation remains within the target.

No change in Repo Rate

The Repo rate remained unchanged at 4%. Repo Rate is the fixed interest rate at which the RBI provides overnight liquidity to banks against the collateral of government and other approved securities under the LAF. It is the policy rate decided by the MPC.

No change in the Marginal Standing Facility (MSF) rate and the Bank rate

The Marginal Standing Facility (MSF) rate and the Bank rate also remained unchanged at 4.25%.

The MSF is a facility under which scheduled commercial banks can borrow additional amount of overnight money from the RBI against their excess SLR securities and also by dipping into their SLR portfolio up to a specified limit at a penal rate of interest. This provides a safety valve against unanticipated liquidity shocks to the banking system.

Bank Rate is the standard rate at which the RBI is ready to buy or rediscount bills of exchange or other commercial papers. This rate has been aligned to the MSF rate and, therefore, changes automatically as and when the MSF rate changes alongside policy repo rate changes.

RATIONALISATION OF RISK WEIGHTAGE FOR HOUSING LOANS- BOOST TO REAL ESTATE SECTOR

Reserve Bank of India recently on October 9th 2020 has come out with an announcement of its decision to rationalize risk-weightage on housing loans. This is an attempt to boost the real estate sector my improving demand for homes in Tier I and Tier II cities, especially having average price range of more than Rs 1 crore.

RBI’s move is based on the recognition of the criticality and need for improving the real estate sector which will have a positive impact on the development of the Economy especially when the Nation is trying to bounce back from the pandemic.

This decision of RBI will make housing loans more attractive for both lenders and borrowers and help in boosting the demand for homes. In this Article, we will clearly understand what changes have been brought in by RBI and how it is expected to boost the real estate sector in particular. .

What is RBI’s announcement?

Rationalize Risk Weights and link them to Loan-to-Value ONLY for all new housing loans to be sanctioned upto 31st March 2022. Let’s first understand the terms Risk Weightage and LTV in detail.

What is Risk Weightage?

A Bank’s primary business is to accept deposit from customers and lend loans. The main source of Revenue is from the Loans it gives to customers and Interest earned from it. As much as a Bank’s Revenue is from such loans, the banks also have the risk of non-collection of loans advanced to customers. Irrespective of whether a loan is collected back from the customer or not, Banks are obliged to protect the deposit holder’s money and repay it to them on demand. For this reason, to safeguard the interest of the deposit holders and enable the bank to be capable to return the money to the, RBI mandates every bank to maintain a Risk-Weightage for every loan advanced to customer. This simply means, for every loan given by the bank, a certain percentage of it should be held as minimum capital by the banks to reduce the risk of insolvency of the bank i.e.the inability of the bank to repay its deposit holders on account of non-payment by borrowers to whom loans were advanced. In case of Housing Loans, when we RBI says that the Risk-Weightage is 35 % and 50% in certain scenarios,it means the bank has to maintain 35% and 50% of the Loan amount as Capital (a reserve fund as safety) for every such loan sanctioned and disbursed respectively.

What is Loan-To-Value Ratio?

LTV ratio is the proportion of the property value that a lender finances through a loan. The core purpose of LTV for a lender is to ensure they do not lend higher amount than the actual price of the property.

For example: Mr. Ajay buys a property for Rs 1 crore, out of which he pays Rs 30 lakhs out of his savings, and obtains loan of Rs 70 lakhs, LTV is 70% (70/100*100) LTV will protect the banker from possible downturn in property prices in future and in scenarios where Borrower is unable to repay the loan.

For example: Mr. Ajay buys a property for Rs 1 crore, out of which he pays Rs 30 lakhs out of his savings, and obtains loan of Rs 70 lakhs, LTV is 70% (70/100*100)
LTV will protect the banker from possible downturn in property prices in future and in scenarios where Borrower is unable to repay the loan.

LTV Vs RISK MATRIX FOR LENDERS

THEN AND NOW

BENEFIT TO BORROWERS AND PROBABLE IMPACT ON REAL ESTATE SECTOR

The biggest beneficiary of RBI’s move would be loan borrowers of over Rs 75 lakhs having an LTV ratio of up to 80!! Such borrowers are mostly in Tier I and Tier II cities where the average price of house is generally more than Rs 1 crore.

SCEANARIO	OLD RULES	NEW RULES
Mr. Shyam intends to Purchase a property worth Rs 2 crore with 20% down payment and 80% loan (Rs 1.6 crores)	LTV 80%, but risk weight 50% as Loan is above Rs 75 lakhs	LTV 80%, but risk weight 35%

HOW DOES A LESS RISK WEIGHT TO BANKS BENEFIT A BORROWER?

More liquidity with banks: Lesser Risk Weightage frees up Bank’s Capital (as they need not keep so much reserve) and makes available more funds that can be used for lending. Better Interest Rates and other Terms:The lesser the LTV, it means borrower is using more of his money. Borrowers can better negotiate with banks of Interest rates and other terms of housing loan that has lesser LTV which is considered less risky by banks.

CONCLUSION: Borrowers who are aware of the terms LTV and the present Risk Weightage norms have a good chance of striking the best deal with banks on terms of housing loan obtained. Since there is higher liquidity with banks, more loans can be given at attractive terms which will encourage home buyers to invest on properties, thereby giving a boost to real estate sector and the economy in general.

THE COMPANIES (AMENDMENT),2020

In order to provide relief to the law abiding corporates and bring measures to promote ease of business for Companies, the Government has amended the existing Companies act,2013 and brought in slew of changes viz., reduction of penalties, decriminalising offences, etc., through the Companies (Amendment) Act, 2020 on 28th of September, 2020. In this article, we will analyse the amendments brought in the act in detail:

Amendments for promoting Ease of business and compliance requirements:

1. List of Listed Companies: Section 2(52) is amended to provide that certain class of companies listed or intend to list of such class of securities as may be prescribed shall be excluded from the definition of Listed companies. Thus, the Central Government may exclude certain companies, based on listing of certain securities on recognized stock exchanges, in consultation with SEBI from the definition of listed companies. For eg., Companies which list only debt securities (NCDs) may be excluded from the definition of listed company for the purposes of the Companies Act.

2. Listing in Foreign jurisdictions

A class of public companies will be allowed to list securities as may be prescribed on stock exchanges in permissible foreign jurisdictions or such other jurisdictions, as may be provided by rules. Further, the Central Government may by notification, exempt any class or classes of public companies referred to the above from any of the following provisions:

1. Chapter III (Prospectus and Allotment of Securities),
2. Chapter IV (Share Capital and Debentures),
3. Section 89 (Declaration in respect of beneficial interest in any share),
4. Section 90 (Register of significant beneficial owners in a company) or
5. Section 127 (Punishment for failure to distribute dividends) of the Act.

3. Rectification of Name of Company: In case of name of an existing company resembling or identical to a registered trademark, the Central Government may direct the company to change it’s name to a new name. The time limit for such compliance of direction given by the Central Government to change the name of company has been reduced from 6 months to 3 months. Further, the Central Government has been empowered to allot a new name to the company, in case of default in complying with its direction instead of imposing punishment for non-compliance for such default. The company is however not prevented from subsequently changing its name.

4. Further issue of Capital:

The Central Government may prescribe days lesser than 15, for deeming decline of offer of rights issue. This will reduce the timelines for applying for rights issues. 5. Declaration of Beneficial Owners

New sub-section (11) has been inserted to enable the Central Government to notify a class or classes of persons who shall, unconditionally or subject to such conditions as may be specified, be exempted from complying with section 89 [except sub-section (10)].

6. Filing of resolutions
The Central Government is empowered to exempt any class of NBFCs and any class of HFCs from filing of resolutions passed to grant loans or give guarantees or to provide security in respect of loans in the ordinary course of their business. Earlier, only Banking Companies were exempted.

7. Corporate Social Responsibility
Now, the companies, which spend an amount in excess of the requirement of 2%, will be allowed to set off such excess amount out of their obligation in the succeeding financial years after complying with the prescribed rules. New sub-section (9) has been inserted to provide that the requirement of constitution of CSR Committee shall not be applicable, in case the amount required to be spent on CSR does not exceed Rs. 50 lakhs and the functions of CSR Committee in such a case, may be discharged by the Board of directors.

8. Preparation of Financial Results
A new section 129A has been inserted to empower the Central Government to provide by rules such class or classes of unlisted companies to prepare periodical financial results of the company, audit or limited review thereof and their filing with Registrar within 30 days from the end of that period as specified in the rules.

9. Remuneration to Independent Directors
If a company has no profits or its profits are inadequate, an independent director may receive remuneration, exclusive of any fees payable in accordance with the provisions of Schedule V

Amendments relating to winding up:

Rule 36(4) of CGST Rules, 2017 – Provisional ITC

Backdrop of Rule 36(4) of CGST Rules, 2017

The emphasis of the provision is to restrict the ITC claimed by registered person in GSTR 3B whose corresponding details of sales have not been uploaded on GST Portal by supplier in his GSTR – 1 (i.e. GSTR – 1 have not been filed by supplier) thereby not visible to the recipient in its GSTR – 2A (Auto-populated return).

As per the new sub-rule (4) inserted in rule 36 of the Central Goods and Service Tax Rules, 2017, a taxpayer filing GSTR-3B can claim provisional Input Tax Credit (ITC) only to the extent of 10% of the eligible credit available in GSTR-2A. The amount of eligible credit is arrived upon those invoices or debit notes, the details of which have been uploaded by the suppliers in the GSTR-2A only. The new percentage applies from 1 Jan 2020 onwards only. The ITC claim was earlier restricted to 20% for the period from 9 Oct 2019 till 31 Dec 2019.

(The notification no. 49/2019- Central Tax dated 9 October 2019 added a new clause to the rule 36 of CGST Rules). The 37th GST Council meeting held on 20 September 2019 had announced that the provisional ITC claim will be restricted under the present GST return filing system of GSTR-1 and GSTR-3B. The ITC claim will not be allowed in full for any recipient if their suppliers have not furnished the details of their outward supplies.

Impact on taxpayers

Before 9 October 2019, all taxpayers claimed ITC on a self-declaration basis in Table 4(a) of GSTR-3B. This means that they declared the summary figure of eligible tax credits under IGST, CGST, and SGST. There was no compulsion to reconcile the ITC figure with the GSTR-2A until now, although it was always advised.

Even if the GSTR-2A reflected an ITC amount lower than the books of accounts, taxpayers could still make their ITC claim in full in the GSTR-3B, and the amount not reflected was treated as provisional credit.

After the implementation of this rule, the provisional ITC amount will be restricted only to the extent of 10% of the eligible ITC value already reflected in the GSTR-2A for that period. Apart from the 10% of eligible ITC which a taxpayer can claim as provisional credit, the balance tax liability will need to be paid in cash.

This new rule could affect the working capital of a taxpayer, as he will be required to make GST payments in cash, despite having paid his supplier for the tax invoice raised to him and having eligible ITC in his books.

S No	Particulars	Before	After
A	Eligible ITC available in the Purchase register	1,00,000	1,00,000
B	Eligible ITC available in the GSTR-2A	60,000	60,000
C	ITC that can be claimed as the provisional credit	40,000	6,000 (60,000*10%)
D=B+C	Total ITC that can be claimed in the GSTR-3B	1,00,000	66,000
E=A-D	ITC not allowed in the GSTR-3B of January 2020	Nil	34,000

The balance ITC that has not been claimed as provisional ITC may be claimed in the succeeding months once details have been actually uploaded by the suppliers. If a supplier has only uploaded part of the pending invoices in a later period, the taxpayer will be able to claim ITC only proportional up to 10% of these pending invoices uploaded.

S No	Particulars	Case I	Case II
A	Provisional ITC claimed (as per example given above)	6,000	6,000
B	Provisional ITC remaining to be claimed (as per the example above)	34,000	34,000
C	Eligible ITC uploaded by suppliers in the month of Feb 2020	29,000	32,000
D=c*10%	Provisional ITC which can be claimed for the month of Feb 2020	2,900 (29,000*10%)	3,200 (32,000*10%)
E=C+D	Total ITC that can be claimed in Feb 2020 (ITC reported by suppliers + provisional ITC)	31,900	34,000^
F=B-E	Balance eligible ITC still not allowed in Feb 2020	2,100	Nil

The restriction on 10% provisional credit will not be supplier-wise. It will be linked to the total eligible ITC from all suppliers based on details uploaded in the GSTR-2A. The restriction on provisional credit will apply to those invoices/debit notes which were supposed to be uploaded by the suppliers and have not been uploaded. This means that a taxpayer can avail full ITC in terms of IGST paid on imports, credit that has been received from an Input Service Distributor (ISD), credit from documents received under reverse charge mechanism and any other such credit.

As GSTR-2A is a dynamic form which updates based on details uploaded by suppliers, the cut-off date for claiming provisional credit will be the due date of filing returns only. Hence, a taxpayer may claim up to 10% of ITC based on invoices uploaded by his suppliers as on the date of filing his GSTR-1.

Suspension brought in to provide reliefs to businesses amidst COVID – 19 Understanding the need of hour, CBIC has provided relaxation in compliance with Rule 36(4) of CGST Rules vide Notification No.

30/2020 – CT, dated 3rd April, 2020 as under: –

“Provided that the said condition shall apply cumulatively for the period February, March, April, May, June, July and August, 2020 and the return in FORM GSTR-3B for the tax period September, 2020 shall be furnished with the cumulative adjustment of input tax credit for the said months in accordance with the condition above.”.

Thus, the government required a registered person to make cumulative adjustments on account of 36(4) for the month of February, March, April, May, June, July, August, 2020 in the month of return of September, 2020. Thus, while filing the returns for September, 2020 businesses shall be very cautious to abide by Rule 36(4) cumulatively for the months of February, 2020 to August, 2020.

To ensure uniformity in the implementation of the said provisions across the fieldformations, the Board, in exercise of its powers conferred under section 168(1) of theCGST Act hereby clarifies certain issues vide Circular No. 142/12/2020-GST dated 09th October 2020.

 It is re-iterated that the clarifications issued earlier vide Circular No.123/42/2019 – GST dated 11.11.2019 shall still remain applicable, except forthe cumulative application as prescribed in proviso to sub-rule (4) of rule 36of the CGST Rules.  Taxpayers shall reconcile the ITC availed in their FORM GSTR-3Bs for the periodFebruary, 2020 to August, 2020 with the details of invoices uploaded by theirsuppliers of the said months, till the due date of furnishing FORM GSTR-1 for themonth of September, 2020.

 The cumulative amount of ITC availed for the said monthsin FORM GSTR-3B should not exceed 110% of the cumulative value of the eligiblecredit available in respect of invoices or debit notes the details of which have beenuploaded by the suppliers under sub-section (1) of section 37 of the CGST Act, till thedue date of furnishing of the statements in FORM GSTR-1 for the month ofSeptember, 2020.

 The excess ITC availed arising out of reconciliation during this period, if any, shallbe required to be reversed in Table 4(B)(2) of FORM GSTR-3B, for the month ofSeptember, 2020. Failure to reverse such excess availed ITC on account of cumulativeapplication of sub-rule (4) of rule 36 of the CGST Rules would be treated as availmentof ineligible ITC during the month of September, 2020.

Tax period	Eligible ITC	ITC availed by the taxpayer (recipient) in GSTR – 3B	Invoices on which ITC is eligible and uploaded by the suppliers till due date of FORM GSTR-1 for the tax period of September, 2020
Feb, 2020	300	300	270
March, 2020	400	400	380
April, 2020	500	500	450
May, 2020	350	350	320
June, 2020	450	450	400
July, 2020	550	550	480
August, 2020	200	200	150
TOTAL	2750	2750	2450

Maximum eligibleITC in terms of rule36 (4) is 2450 +[10% of 2450]=2695. Taxpayerhad availed ITC of2750. Therefore,ITC of 55 [2750-2695] would berequired to bereversed. ITC Reversal required to the extent of 55.

10% Rule shallapply independentlyfor September,2020.

Tax Collection at Source (‘TCS’)

Exceptions

1. Buyer is liable to deduct TDS and has withheld such amount
2. Export of Goods or Services
3. Buyer is Central/State Government
4. Buyer is Embassy / High Commission / Legation / Commission / Consulate / Trade Representation of a Foreign State
5. Buyer is Local Authority such as Panchayat, Municipality etc.
6. Buyer is Person importing goods into India
7. any other person as notified by the Central Government (No notification issued till date)

TCS Payment, Return and Certificate

1. Monthly Payment by 7th of the following month
2. Quarterly TCS return in Form 27EQ (Due date -15 July, 15 October, 15 January & 15 May)
3. TCS certificates to be issued within 15 days from the due date of TCS return (Due date -30 July, 30 October, 30 January & 30 May

No option available

1. To obtain certificate at Lower / Nil rate

Interest

1. Delayed payment attracts simple interest at 1% for each month
2. Where seller is an assessee in default -from the date on which such tax was collectible till the date on which the tax was actually paid by the seller

Penalty & Prosecution

Section 271CA

1. Penalty for failure to collect TCS
2. Sum equal to the amount of tax which seller failed to collect ( imposable by Joint Commissioner)

Section 221

1. Penalty for failure to deposit TCS after collection
2. Up to 100% of TCS which seller failed to deposit (at discretion of the AO)

Section 276BB

1. Prosecution for failure to pay tax collected at source to the credit of Central Government
2. Rigorous imprisonment for a term of minimum 3 months to maximum 7 years with fine

Highlighting points (clarification obtained)

As per Section 145A, the value of sales shall include any kind of tax recovered. Also, Circular 23/2017 dated 19.07.2020 does not apply to Chapter XVII-BB (TCS Provisions). Hence, TCS shall be collected on the GST component also

TCS shall be applicable only on the amount received on or after 1st 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 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 1st October, 2020

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 may be noted 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 1st April, 2020 shall be taken into account.

For calculating the threshold limit of ₹ 10 crore in the preceding financial year, section 206C(1H) provides that Total Sales, Turnover, Gross Receipts from the business shall be considered. As such, the receipts of sale of services shall also be considered.

Further, 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 may be noted that this TCS provision shall be applicable on the amount of all sale consideration received on or after 1st October, 2020 without making any adjustment for the amount received in respect of sales made before 1st October, 2020.

It may also be noted 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 (Rs. 3,750 this year) i.e. [0.1% of (Rs. 1 crore - Rs. 50 lakh)] shall be collected.