What is Section 206CQ of Income Tax Act?

Section 206CQ of Income Tax Act, 1961 in India refers to provisions for Tax Collection at Source (TCS) on specific transactions. This section focuses on the tax to be collected by sellers from buyers when certain goods or services are purchased, and the tax collected is then remitted to the government.

Here’s a breakdown of key aspects of Section 206CQ:

• Section 206CQ applies to the seller of specific goods or services, who must collect tax at source (TCS) from the buyer at the time of sale. The seller is responsible for collecting a percentage of the total transaction value as tax.

• TCS is applicable on certain transactions, including the sale of alcoholic liquor for human consumption, tendu leaves, scrap, minerals, timber, and forest produce, among others. The seller collects TCS at rates specified in the Income Tax Act.

• Section 206CQ particularly addresses TCS on overseas remittances, sale of overseas tour packages, and other high-value transactions, such as the sale of motor vehicles over Rs. 10 lakhs.

• For foreign remittances under the Liberalized Remittance Scheme (LRS), a 5% TCS rate is applicable if the remittance exceeds Rs. 7 lakh. For overseas tour packages, TCS is collected at 5% regardless of the threshold amount.

• If the buyer provides their PAN (Permanent Account Number) and they are eligible to claim TCS credits in their tax return, they can claim a refund if the TCS collected exceeds their tax liability.

• The seller or service provider must deposit the TCS collected to the government and file quarterly TCS returns in Form 27EQ.

This is all about 206CQ of income tax act

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Wondering what is Section 206CQ Income Tax Act? Section 206CQ of the Income Tax Act, 1961, in India pertains to the collection of tax at source (TCS) on sale of goods. It was introduced to widen the tax base and to track high-value transactions.

Section 206CQ applies to a seller whose total turnover in the preceding financial year exceeds Rs10 crore. This threshold is applicable from the financial year 2021-22 onwards.

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• It mandates the collection of tax at source at the rate of 0.1% on the receipt of sale consideration exceeding Rs50 lakh from a buyer in a financial year for sale of goods.

• This provision applies to transactions where the consideration is received by the seller from a buyer, irrespective of whether the buyer is an individual, Hindu Undivided Family (HUF), firm, company, or any other person.

: Certain transactions are exempted from TCS under Section 206CQ, such as:

• Transactions where the buyer is liable to deduct TDS (Tax Deducted at Source) under any other provision of the Income Tax Act.

• Transactions covered under other specified transactions where TCS is already applicable.

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• The seller is required to collect TCS from the buyer and deposit it with the government within the prescribed time frame.

• Quarterly statements reporting such transactions must be filed electronically with the tax authorities.

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• Section 206CQ aims to curb tax evasion by capturing high-value transactions and ensuring that taxes are collected at the source itself.

• It imposes additional compliance requirements on sellers with turnover above the specified threshold, necessitating efficient management of records and reporting.

Section 206CQ of the Income Tax Act expands the scope of tax collection at source to include certain high-value transactions in the sale of goods. It places responsibility on sellers with significant turnovers to collect TCS on eligible transactions and adhere to reporting requirements.

Understanding and complying with these provisions is crucial for businesses to avoid penalties and ensure smooth tax compliance under Indian tax laws. This is all about 206CQ income tax.

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The TCS 206CQ of Income Tax Act

is a provision of the Income Tax Act. It requires sellers of goods to collect tax at source from buyers on high-value transactions.

The section 206CQ means that there will be more transparency and accountability in business transactions. It also curbs the circulation of black money in the economy.

Sellers whose turnover, gross receipts, or sales from the business exceed Rs. 10 crore in the previous financial year are required to pay tax.

The rate of tax under this section is 0.1% of the sale exceeding Rs. 50 lakh.

Some

goods are exempt from this section, like goods on which TDS is already paid or goods that are exported out of India.

Nonresident sellers who do business in India are also required to collect tax at source on high-value transactions.

The time limit for depositing the tax is within 7 days from the end of the month in which the tax was collected. Failure to collect tax at source results in penalties.

Remember, Section 206 CQ applies only to the sale of goods not to services. Hope now it is clear about

TCS 206cq of the Income Tax Act.

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Tax is levied on almost everything and we need to show that we all have paid our taxes duly. However there are still many people who do not know under which section which tax details are mentioned and one such is 26AS. I could not find this section anywhere hence had to ask an expert what is section 206CQ of Income Tax Act. He said that people filing the form 26AS need to know what this section is. So before telling you about Section 206CQ, let me tell you what is form 26AS where the former section is mentioned.

Form 26AS deals with the consolidated tax statement that provides all the details of tax which gets deducted at source, or collected at source, advance tax paid assessee along with the self-assessment tax as well. 

What does Sec 206CQ of income tax act state?

The astonishing thing I got to know from that expert uncle is that there is no such Section 206 CQ in the Income Tax Act of 1961. It does get mentioned in form 26AS and it deals with the collection of tax at source for remittance that is made under the Liberalised Remittance Scheme. It is basically a TCS deposit challan.

I hope you have understood what the

Section 206CQ of Income Tax Act deals with and what it actually acts as.