Bug 6604

I got a mail tow times which is attached below - 
M/s DHARAMPAL PREMCHAND LIMITED,

 

Finance Act 2021 – Income Tax amendments effective from July 1, 2021 

As you may be aware, the Union Budget 2021, vide the Finance Act, 2021, has introduced a new Section 194Q for tax deduction at source (TDS) on “Purchase of Goods”. This will apply to a buyer who is responsible for paying any sum to any resident (hereafter in this section referred to as the seller) for purchase of any goods.  

The aforesaid provisions have been made effective from 1 July 2021 and accordingly, for payments/ credits to be made to Thermax Limited from 1 July 2021 onwards we will require the following details/confirmation from you:

If no confirmation is received by 30th June, 2021, we shall collect TCS on the Goods sold by us to you and also apply the higher rate of TCS u/s 206CCA, as mentioned in para A above. 

Please click the following link to complete the complience information.

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https://ecv.microsoft.com/JEwRBmdU1v

Kindly ignore this mail if information is already submitted or is not applicable to you.

Summary of New Incometax provisions:

A.            The provisions of section 194Q can be summed up as follows:-: 

Does not apply to imports i.e. purchases from outside India 
Who should deduct TDS - The Buyer whose total sales, gross receipts or turnover exceeds Rs. 10 Crore during the previous year immediately preceding the financial year in which the transaction takes place. 
Threshold Limit –Aggregate purchases should exceed INR 50 lakhs in that Financial Year 
Rate of TDS on purchase of goods is 0.10%. 
Threshold limit -TDS will apply on amount of sale value of goods exceeding Rs 50 lacs in a financial year. 

The following points will also affect rate of TDS to be applied:- 
If the Seller of Goods has not provided Permanent Account Number (PAN) or Aadhar Number to the Buyer then the Buyer would apply TDS at 5 percent instead of 0.1 percent.  
Seller shall not collect TCS if the company is already deducting TDS on the same transactions. TDS under Section 194Q would prevail over TCS under section 206C(1H). 
Further a new section 206CCA is also introduced w.e.f 01-July-2021, where a Tax Collector is required to check/ensure that the customer / buyer of goods has filed their Income Tax Returns for last 2 previous years, in cases where TCS liability is more than Rs. 50,000 (in each of these two previous years). If the customer/ buyer of goods is found to be non-filer of the income tax returns, then in such cases TDS rate applied would be higher of below: - 
Twice the rate as specified relevant provision of the Act, or 
The rate of 5 percent 
B.            How the amendment in Income Tax will affect your transactions? 

If your turnover was MORE than Rs.10 Crores in previous financial year ended 31-03-2021, we will not charge TCS on Sale of Goods (Section 206C(1H) made post 1stJuly 2021, as was being done earlier. 
Since the provisions of Section 194Q override the provisions of Section 206C(1H), you have to apply TDS of @0.10% u/s 194Q on transaction amount exceeding Rs. 50 Lacs in the current financial year i.e. F.Y.2020-21. 
You will issue TDS certificate (Form 16A) will be issued to us wherever applicable as prescribed by the law, within 15 days from the end of the quarter in which the transaction has taken place. 
If your turnover was LESS than Rs.10 Crores in previous financial year ended 31-03-2021, we will continue to charge TCS on Sale of Goods (Section 206C(1H), as was being done earlier. 
As per provisions of Section 206C(1H), we will apply TCS of @0.10% in our Invoices to you, on transaction amount exceeding Rs. 50 Lacs in the current financial year i.e. F.Y.2021-22. 
We will issue TCS certificate (Form 27A) will be issued to us wherever applicable as prescribed by the law, within 15 days from the end of the quarter in which the transaction has taken place. 
Regards 

Thermax Limited Taxation Team

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