Section 206C(1H) requires a seller whose turnover exceeded Rs.10 crore in the previous year to collect TCS at 0.1% on sale consideration received above Rs.50 lakh from a buyer in a year. Where the buyer is liable to deduct TDS under Section 194Q on the same transaction, 194Q prevails and 206C(1H) does not apply.
The rule
A seller with turnover above Rs.10 crore in the preceding financial year collects 0.1% TCS on the amount of sale consideration received from a buyer that exceeds Rs.50 lakh in the financial year. TCS is on receipts (not invoice value), collected at the time of receipt, and deposited and reported in Form 27EQ.
206C(1H) vs 194Q
| Provision | Who acts | Rate |
|---|---|---|
| 194Q (TDS) | Buyer deducts | 0.1% on purchase above Rs.50 lakh |
| 206C(1H) (TCS) | Seller collects | 0.1% on receipts above Rs.50 lakh |
Both can apply to the same transaction. The rule: if the buyer is liable under 194Q, the buyer deducts TDS and the seller does not collect 206C(1H). 194Q takes precedence.
Status note
The 206C(1H) levy has been subject to review and possible withdrawal in light of the overlap with 194Q. whether 206C(1H) remains in force for your period before applying it.
Practical points
- TCS under 206C(1H) is on receipts; 194Q TDS is on purchase/credit.
- No PAN: TCS at 1% (Section 206CC).
- Issue Form 27D to the buyer; report in 27EQ.
- Coordinate buyer/seller declarations to avoid double collection.
Key takeaways
- 206C(1H): 0.1% TCS on receipts above Rs.50 lakh (seller turnover > Rs.10 cr).
- 194Q (buyer TDS) takes precedence over 206C(1H).
- TCS is on receipts; 194Q is on purchase/credit.
- Verify current status of 206C(1H) before applying.