Relevant Definitions for section 206C(1G)
Authorised dealer means a person authorised by the Reserve Bank of India under sub-section (1) of section 10 of the Foreign Exchange Management Act, 1999 (42 of 1999) to deal in foreign exchange or foreign security.
Overseas tour programme package means any tour package which offers visit to a country or countries or territory or territories outside India and includes expenses for travel or hotel stay or boarding or lodging or any other expenditure of similar nature or in relation thereto.
Explanation
As per section 206C(1G) of Income-tax Act, 1961,
(a) Every person, being an authorised dealer, who receives an amount, for remittance out of India from a buyer, being a person remitting such amount out of India under the Liberalised Remittance Scheme of the Reserve Bank of India. or
(b) Every person, being a seller of an overseas tour program package, who receives any amount from a buyer, being the person who purchases such package.
shall, at the time of debiting the amount payable by the buyer or at the time of receipt of such amount from the said buyer, by any mode, whichever is earlier, collect from the buyer, a sum equal to 5% of such amount as income-tax.
Threshold limit : The sum to be collected by an authorised dealer from the buyer shall be equal to 5% of the amount or aggregate of the amounts in excess of Rs. 7 lakh remitted by the buyer in a financial year, where the amount being remitted is for a purpose other than purchase of overseas tour program package.
It means, if the remittance is made for purchase of overseas tour program package then this sub-section is applicable irrespective of threshold limit.
TCS shall be collected @ one half per cent (0.5%) of the amount or aggregate of the amounts in excess of Rs. 7 lakh remitted by the buyer in a financial year, if the amount being remitted out is a loan obtained from any financial institution as defined in section 80E, for the purpose of pursuing any education.
Note: The authorised dealer shall not collect the sum on an amount in respect of which the sum has been collected by the seller.
This sub-section is not applicable, if the buyer is:
(i) liable to deduct tax at source under any other provision of this Act and has deducted such amount;
(ii) the Central Government, a State Government, an embassy, a High Commission, a legation, a commission, a consulate, the trade representation of a foreign State, a local authority as defined in the Explanation to clause (20) of section 10 or any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.
Relevant Definitions for section206C(1H)
Buyer means a person who purchases any goods, but does not include,—
(A) the Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or
(B) a local authority as defined in the Explanation to clause (20) of section 10; or
(C) a person importing goods into India or any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein;
Seller means a person whose total sales, gross receipts or turnover from the business carried on by him exceed Rs. 10 crore during the financial year immediately preceding the financial year in which the sale of goods is carried out, not being a person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.
Explanation
As per section 206C(1H) of Income-tax Act, 1961, every person being a seller, who receives any amount as consideration for sale of any goods* of the value or aggregate of such value exceeding Rs. 50 lakh in any previous year shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 0.1 % of the sale consideration exceeding Rs. 50 lakh as income-tax.
*Sale of goods excludes:
(a) goods being exported out of India or
(b) goods covered in sub-section (1) or sub-section (1F) or sub-section (1G)#
#Refer the link given below for complete reading of this section.
Further, if the buyer has not provided the Permanent Account Number or the Aadhaar number to the seller, then tax shall be collected at 1 %.
If the buyer is liable to deduct tax at source under any other provision of this Act on the goods purchased by him from the seller and has deducted such amount then this sub-section shall not apply.
#For complete reading of section 206C: https://www.incometaxindia.gov.in/pages/acts/income-tax-act.aspx
