Points to note:
Suppose a supplier chooses to charge TCS in the invoice,
e-Invoicing is being implemented in a phased manner in India. e-Invoicing is a step taken by the government to avoid tax evasion by mandating every B2B invoice to be reported on the government portal.
In the third phase, e-invoicing applies to all companies with a turnover higher than Rs.50 crores from 1st April 2021.
Under the current e-invoicing mandate, there is no separate provision for TCS under section 206C(1H). While generating the Invoice Reference Number, TCS included in the invoice value should be included in ‘other charges’, and thus, invoice value will be reported inclusive of TCS. Therefore, automatically in GSTR-1 also will consist of this amount in the invoice value.
This new provision of TCS is applicable on a receipt basis and not a sale. So, the seller of goods must collect TCS on advances received and later adjusted against the invoice. Thus, it is advisable to collect TCS on a receipt basis rather than at the time of issue of the invoice. Also, if TCS is not present in the invoice, there will be no effect on e-invoicing.
As per Circular No. 17 of 2020 issued by CBDT, no GST adjustments should be made for calculating TCS due to indirect taxes or discounts as tax is deducted on receipt of consideration and not the sale.
Sales by an SEZ unit is considered as deemed export. Still, TCS is applicable if the amount received from a buyer crosses Rs.50 lakh during the financial year.
This provision is made applicable only on the sale of goods. Thus, payments received against the supply of services are not covered under this provision.
It is the 7th day from the end of the month in which the supplier receives the payment. Every tax collector shall submit a quarterly TCS return, i.e., Form 27EQ, regarding his tax in a particular quarter.
In such cases, shall deduct TCS at 1% of sale consideration. Section 206CC overrules section 206C(1H).
Section 206C(1H) states that the total turnover of the business shall be considered. So, the sale of services shall also be considered for calculating the threshold limit of Rs.10 crore.