TCS on Sales of Goods withdrawn from 1-4-2025 Finsys ERP

Major TCS Changes from April 1, 2025: Removed on Sales, and simplify compliance for businesses and taxpayers.

Extract from the Memorandum to the Union Budget 2025 released by Govt of India

Extract from the Memorandum to the Union Budget 2025 released by Govt of India

XIII. Reduction in compliance burden by omission of TCS on sale of specified goods.

 

1. Sub-section (1H) of section 206C of the Act, used to require ( till 31-3-2025)  any person being a seller who receives consideration for sale of any goods of the value or aggregate of value exceeding Rs 50 lakhs in any previous year, to collect tax from the buyer at the rate of 0.1% of the sale consideration exceeding Rs 50 lakhs, subject to certain conditions.

2. Section 194Q of the Act, requires any person being a buyer, to deduct tax at the rate of 0.1%, on payment made to a resident seller, for the purchase of any goods of the value or aggregate of value exceeding fifty lakh rupees in any previous year .

3. Sub-section (1H) of section 206C mandates tax collection at source (TCS) by a seller while Section 194Q provides for tax deduction at source (TDS) by a buyer on the same transaction.
4. Further, it is provided in sub-section (1H) of section 206C of the Act that the provision will not apply, if the buyer is liable to deduct TDS under any other provision of this Act on the goods purchased from the seller and has deducted such amount. Representations have been received that it becomes difficult for the seller to check whether the buyers have ensured the compliance of TDS deduction under 194Q of the Act.
5. This results in both TDS and TCS being made applicable on the same Transaction.

6. Therefore, to facilitate ease of doing business and reduce compliance burden on the taxpayers, it is proposed that provisions of sub-section (1H) of section 206C of the Act will not be applicable from the 1st day of April, 2025.

6. These amendments will take effect from the 1st day of April 2025.

 

This was a doubling “problem”… and leading to problems for both sellers and buyers… hence this has been removed from the law w.e.f. 1-4-2025

 

Action required in Finsys ERP : MUST Do

1. Cannot remove since old year compliance continue for audit etc
2. so, new year, Change the Flag “TCS” to “N” — in Party Master
3. and TCS percentage should be set as “0” — in Party Master

Source 1 : https://taxguru.in/income-tax/tcs-sale-goods-removed-april-1-2025-faqs.html

Source 2 : https://www.taxscan.in/major-tcs-changes-from-april-1-2025-removed-on-sales-foreign-education-more/498961/

Source 3 : https://cleartax.in/s/tcs-section-2061h-finance-act-2020-e-invoicing-gst

Source 4 : What was the situation of both TDS and TCS,  till 31-3-2025 ?  :  See link : https://mlgassociates.in/interplay-of-tds-194q-and-tcs-2061h-100-clarity

What to do, if already charged in invoices in April 2025 ?

Answer : Talk to your Friendly CA / Tax Consultant, Most likely answer is that you must issue the customer a Credit Note in 32 series.

Answer 2  : Do not deposit this TDS, do not upload in the TDS return of April to June 2025, the customer may face problems in getting this credit ( Depends on if the Govt software or the Govt officer is lenient or not )

 

Finsys at your service

Call Centre : 9015-220-220 ( Extn 1 or 2 )

Contact us page : click here

Support Email address : Support@finsys.in

 

Keywords : TCS on Sales of Goods withdrawn from April 2025 Finsys, TDS-TCS interplay, TDS 194Q is supreme now. and TCS 206C, for sale of goods has been withdrawn