The government has taken a major step to reduce compliance burden for businesses by removing Tax Collected at Source (TCS) on the sale of specified goods from April 1, 2025. This change eliminates the overlap between TCS under Section 206C(1H) and TDS under Section 194Q, which was causing unnecessary complications for taxpayers.
Existing TCS and TDS Provisions
1️⃣ Section 206C(1H) – TCS on Sale of Goods
- Sellers were required to collect TCS at 0.1% on sales exceeding ₹50 lakh in a financial year.
2️⃣ Section 194Q – TDS on Purchase of Goods
- Buyers were required to deduct TDS at 0.1% on payments exceeding ₹50 lakh made to a seller in a financial year.
3️⃣ Issue of Dual Compliance
- Since both TDS and TCS were applicable on the same transaction, sellers had difficulty verifying whether buyers had deducted TDS under Section 194Q before applying TCS under Section 206C(1H).
- This led to unnecessary duplication, making compliance complex for businesses.
Key Change: TCS on Sale of Goods Removed
To simplify tax compliance and promote ease of doing business, the government has decided that from April 1, 2025, the TCS requirement under Section 206C(1H) will no longer apply.
✅ No need for sellers to collect TCS on sales exceeding ₹50 lakh
✅ Only TDS under Section 194Q will apply, eliminating dual taxation
✅ Reduces unnecessary paperwork and tax reconciliation for businesses
This move will significantly benefit businesses, particularly those engaged in high-value transactions, as they will no longer have to track both TDS and TCS compliance on the same transaction.
Effective Date
📅 These amendments will be applicable from April 1, 2025.
This is a positive step towards tax simplification, reducing compliance costs and administrative burdens for taxpayers.
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