TCS (Tax Collected at Source) Importance Of Technology In TCS Tax

by Kushal Verma Search Engine Marketing

The new amendment in TCS

In the context of the latest amendments made by the Indian Government regarding Income Tax Act Section 206 C (1H) TCS (Tax Collected at Source) will be effective from 1 October 2020 for all seller with an annual turnover above Rs. 10 Crore. The latest changes were done in order to widen the scope of TCS tax.

What is TCS?

TCS tax full form is Tax Collected at Source is a tax which the seller collects from the buyer at the time of selling the goods. The Government has included a New Sub Section (1H) under Section 206 C which implies that a merchant who is selling products inside India may require collecting TCS from the purchaser.

If the turnover of the seller is greater than Rs. 10 crores for the previous financial year (FY) and sells goods exceeding Rs. 50 Lakhs within India and along with it if the buyer has provided the PAN Card then the seller will collect 0.075% TCS on the bill amount from the buyer.

A seller who sells goods exceeding 50 Lakh to buyer or more in a financial year will have to collect the TCS at the time of receiving the billing amount. If the buyer is registered with Pan number he collects 0.075% TCS tax. If the buyer is not registered with Pan number he will collect 0.1% TCS.

Every seller with an annual turnover above 10 Crores in the immediately preceding financial year is required to collect TCS. Although there are some exclusions when the TCS is not collected.

 TCS income tax shall not apply on the following:

  • Where the buyer has withheld the required amount of taxes
  • On goods export
  • When the sale is made to the Central or State Government or Trade representative, Local Authority, any embassy or consulate, TCS tax is not collected.
  • TCS is also not applicable when the sale is made to a person who is importing any goods into India.


The widespread expanse of TCS provision was a part of the Union Budget 2020 introduced in the Indian Parliament in February 2020 and was intended to be made applicable from 1 April 2020.

 On account of various re­pre­sen­tations taken from the industry, the applicability of the conditions was conceded to 1 October 2020 in order to provide enough time for the industry to prepare for the necessary compliance. The government has also made eminent changes in the expression of the new prerequisite to clarify that import and export transactions are outside the purview of TCS provision.

Importance of technology in TCS

Having said the above mentioned, there are still some open zones that require clarification. For example, the issue whether TCS is to be applied on the total invoice including or excluding GST; the effect on TCS on the incomplete recovery of receipt, for example regardless of whether TCS will be allowed to be included for the part amount accepted against any invoice. Regardless of whether TCS will likewise apply on deals made at the very latest 30 September 2020, despite the fact that sales consideration has been gotten on or after 1 October 2020 and so on would require considering.

Aside from this, the taxpayer will be needed to make essential changes in the invoice/receipt vouchers to encourage the TCS assortment. Changes in the ERP/accounting software and standard working system may likewise be considered to keep a beware of edge, receipt, and so on.

Any distributor, the retailer needs to be aware of TCS as it will be mandatory from 1 October 2020. Here small & medium business need technical support to calculate proper TCS that will be paid or collected at the point of sale. Any businessman who is buying the goods from say ABC company should not think that if his turnover is not 10 crore he doesn’t need to pay TCS tax. He will have to pay the TCS because the seller will be selling goods above 50 lacs to him, and his total turnover may be above 10 crores. This widens the scope of TCS and introduces the need to have a software technology well equipped with the new upcoming changes in the Tax system.

Being a seller you must empower your business with a software technology equipped with all taxes that will calculate and collect the taxes at the time of billing. It is quite impossible to manually calculate everything. And also the software will empower you and you can utilise the precious time wasted in repetitive work in other productive tasks. This will also improve the overall productivity of the business.


Having discussed the importance of Tax collected at source, which will be effective from 1st October 2020 with certain amendments, it becomes even more important for the taxpayer/businessman/ retailer/distributor to equip their businesses with a software that will ease out the complete burden of tax calculation. Marg ERP 9+ is a software perfect for SMEs & MSMEs ready with TCS. You can easily book demo & get to know more about it.

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About Kushal Verma Innovator   Search Engine Marketing

15 connections, 0 recommendations, 62 honor points.
Joined APSense since, January 6th, 2020, From Delhi, India.

Created on Sep 30th 2020 04:56. Viewed 136 times.


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