Direct Tax Newsletter – Circulars and Notifications – October 2020

Due Dates

7th October, 2020 – (Deposit TDS/TCS for the month of September, 2020)

15th October, 2020- Issue of TDS Certificate for tax deducted under section 194-IA, 194-IB and 194M in the month of August, 2020

30 October 2020 – (Due date for furnishing of challan-cum-statement in respect of tax deducted under section 194-IA, 194IB, 194M in the month of September, 2020)


Clarification on doubts arising on account of new TCS provisions

Finance Act, 2020 amended provisions relating to TCS with effect from 1st October, 2020 to provide that seller of goods shall collect tax @ 0.1 per cent (0.075% up to 31.03.2021) if the receipt of sale consideration from a buyer exceeds Rs. 50 lakh in the financial year. Further, to reduce the compliance burden, it has been provided that a seller would be required to collect tax only if his turnover exceeds Rs. 10 crore in the last financial year. Moreover, the export of goods has also been exempted from the applicability of these provisions.

It is clarified that TCS shall be applicable only on the amount received on or after 1st October, 2020. For example, a seller who has received Rs. 1 crore before 1st October, 2020 from a particular buyer and receives Rs. 5 lakh after 1st October, 2020 would be required to collect tax on Rs. 5 lakh only and not on Rs. 55 lakh [i.e Rs.1.05 crore – Rs. 50 lakh (threshold) by including the amount received before 1st October, 2020.

As the threshold is based on the yearly receipt, it may be noted that only for the purpose of calculation of this threshold of Rs. 50 lakh, the receipt from the beginning of the financial year i.e. from 1st April, 2020 shall be taken into account. For example, in the above illustration, the seller has to collect tax on receipt of Rs. 5 lakh after 1st October, 2020 because the receipts from 1st April, 2020 i.e. Rs. 1.05 crore exceeded the specified threshold of Rs. 50 lakh.

Further, the seller in most of the cases maintains running account of the buyer in which payments are generally not linked with a particular sale invoice. Therefore, in order to simplify and ease the compliance of the collector, it may be noted that this TCS provision shall be applicable on the amount of all sale consideration received on or after 1st October, 2020 without making any adjustment for the amount received in respect of sales made before 1st October, 2020.

TCS is advance income-tax/TDS for which the buyer would get the credit against his actual income tax liability and if the amount of TCS is more than his tax liability, the buyer would be entitled for refund of the excess amount along with interest.


Faceless Appeals- Another initiative for transparent litigation !!!

The transparency in taxation has been extended to litigation as well, where now the appeals have also become faceless with effect from 25th September, 2020.To impart greater efficiency, transparency and accountability; Finance Minister had proposed to amend the Income Tax Act so as to enable Faceless appeal on the lines of Faceless assessment in February 2020.

Highlights of notified scheme are as follows:

– Similar to Faceless assessment, Appeal unit, National and Regional Faceless Appeal Centre will be set up
– All the communication will be through the National Centre
– Appeal will be assigned to Regional Centre (appeal unit)
– Appeal units will perform the function like disposing appeal, admitting additional grounds of appeal, making such further inquiry providing opportunity of being heard, review of draft order
– Appeal unit shall prepare a show-cause notice containing the reasons for enhancement or reduction of amount
Draft order will be sent to an appeal unit, other than the appeal unit which prepared such order, in any one Regional Faceless Appeal Centre through an automated allocation system, for conducting review of such order
– Where initiation of penalty has been recommended in the order, national centre will serve a notice on the appellant calling upon him to show cause as to why penalty should not be imposed upon him
– Notice/order can also be delivered to assessee by way of uploading an authenticated copy on the appellant’s Mobile App (application software of the Income-tax Department will be developed for mobile)
Request for personal hearing (through video conferencing) can be made to make oral submissions or present case before the appeal unit
-Under Faceless Appeals, all Income Tax appeals will be finalised in a faceless manner under the faceless ecosystem with the exception of appeals relating to serious frauds, major tax evasion, sensitive & search matters, International tax and Black Money Act.