TCS on Purchase of Goods under Section 206C(1H) Withdrawn – Changes
Effective from 01.04.2025
Background on Section
206C(1H)
Under the Income Tax Act,
Section 206C(1H) was introduced to mandate the collection of tax at source
(TCS) on the sale of goods. This provision required a seller to collect 0.1%
TCS on receipts exceeding ₹50 lakh from a buyer in a financial year. The
responsibility was on sellers whose turnover exceeded ₹10 crore in the
preceding financial year.
Key Change in Budget 2025
Before 1st April 2025
TCS @ 0.1% was applicable
on sale consideration exceeding ₹50 lakh from each buyer.
❌ From 1st April 2025 onwards
TCS under Section
206C(1H) is no longer applicable — regardless of the
transaction value.
Purpose of the Amendment
This amendment aims to:
·
Simplify tax compliance
for businesses dealing in high-value goods.
·
Eliminate unnecessary TCS obligations and reporting
for sellers.
·
Support ease of doing business, especially
in the B2B trade segment.
Impact on Businesses
|
Particulars
|
Before
1 April 2025
|
After
1 April 2025
|
|
Applicability
|
Sale
of goods > ₹50 lakh
|
Not
Applicable
|
|
Threshold
Limit
|
₹50
lakh per buyer
|
Not
Applicable
|
|
TCS
Rate
|
0.1%
|
NIL
|
|
TCS
Reporting in TCS Return
|
Mandatory
|
Not
Required
|
Conclusion
The withdrawal of TCS on
the purchase of goods under Section 206C(1H) is a positive and welcome move
for businesses. It reduces paperwork, lessens reconciliation hassles, and
streamlines financial transactions. For tax professionals and sellers, this
change will significantly lower compliance costs and complexities.
Disclaimer: All the Information is based on the notification, circular and order issued by the Govt. authority and judgement delivered by the court or the authority information is strictly for educational purposes and on the basis of our best understanding of laws & not binding on anyone.
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