CBDT vide Notification No. 20/2022 dated 30.03.2022 in S.O. 1494(E) notified non-applicability of TCS provisions of section 206C(1G) in relation to non-resident individual visiting India.
Section 206C of the Act provides for the collection of tax at source (TCS) on the business of trading in alcohol, liquor, forest produce, scrap, etc.
Sub-section (1) of the said section, inter-alia, provides that every person, being a seller shall, at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the buyer of certain goods a sum equal to specified percentage, of such amount as income-tax.
Section 206C(1G) provides for tax collection at source (TCS) on remittance under Liberalised Remittance Scheme (LRS) of Reserve Bank of India exceeding Rs. 7 Lakh in a year and the rate of TCS is 5 per cent.
TCS under this section shall also apply on the sale of the overseas tour package without any threshold limit and the rate of TCS is five per cent.
The fifth proviso to section 206C(1G) provides that the TCS provision shall not apply if the buyer is,-
(a) liable to deduct tax at source under any other provision of the Act and he has deducted such amount.
(b) the Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate, the trade representation of a foreign State, a local authority as defined in Explanation to clause (20) of section 10 or any other person notified by the Central Government in the Official Gazette for this purpose subject to such conditions as specified in that notification.
CBDT has also issued a Press Release dated 31.03.2022 on the matter. The press release reads as follows-
Section 206C (1G) of the Act provides for collection of tax by a seller of an overseas tour programme package from a buyer, being a person purchasing such package, at the rate of 5% of the amount of the package. Representations were received from domestic tour operators who were facing difficulties in collection of tax from non-resident individuals visiting India who were booking overseas tour package from such domestic tour operators. Since such persons may not have a PAN, tax is required to be collected at higher rates. Further, such non-residents may find it difficult to furnish their ITR and claim refunds. In order to remove such difficulties, the Central Government, in exercise of powers conferred under section 206C(1G) of the Act, has specified that the provisions of the said section shall not apply to a buyer being an individual who is not a resident in India in terms of clause (1) and clause (1A) of section 6 of the Act and who is visiting India. Hence, a domestic tour operator is not required to collect tax on sale of overseas tour package to non-resident individuals visiting India.
In this regard, CBDT has issued Notification No. 20/2022 dated 30th March, 2022.
The notification states that the provisions of sub-section (1G) of section 206C shall not apply to an individual who is not a resident in India in terms of clause (1) and clause (1A) of section 6 of the Act, and who is visiting India.
In other words, TCS provisions on LRS etc. under section 206C(1G) shall not apply to non-residents who are on a visit to India.
Read the full text of Notification No. 20/2022 dated 30.03.2022 on Exclusion from Section 206C(1G)
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 30th March, 2022
INCOME-TAX
S.O. 1494(E).—In exercise of the powers conferred by clause (ii) to fifth proviso to sub-section (1G) of section 206C of the Income-tax Act, 1961 (43 of 1961)(hereinafter referred to as ‘Act’), the Central Government hereby notifies that the provisions of sub-section (1G) of section 206C shall not apply to an individual who is not a resident in India in terms of clause (1) and clause (1A) of section 6 of the Act, and who is visiting India.
2. This notification shall come into force with effect from the date of publication of this notification in the Official Gazette.
[Notification No. 20/2022/F. No.370142/9/2022-TPL]
ANKIT JAIN, Under Secy.
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