CBDT vide Notification No. 99/2022 dated 17.08.2022 in S.O. 3878(E) notified that TCS provisions of section 206C(1G) of the Income-tax Act, 1961 (‘Act’) shall not apply to a person (being a buyer) who is a non-resident in terms of section 6 of the Act and who does not have a permanent establishment (PE) in 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.
The section empowers the Central Government to notify a person subject to such conditions where tax collection shall not be made under this provision.
In this regard, CBDT has issued Notification No. 99/2022 dated 17th August, 2022.
The notification states that the provisions of sub-section (1G) of section 206C shall not apply to a non-resident buyer having no PE in India.
Earlier on 30.03.2022 vide Notification No. 20/2022, the Board notified 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. This earlier notification has been superseded by this notification.
Though the Notification No. 20/2022 has been withdrawn, it is clarified that tax collected or not collected at source from 30-03-2022 to 16-08-2022 relying upon such notification shall be treated as legally complied with the provisions of section 206C(1G).
In other words, TCS provisions on LRS etc. under section 206C(1G) shall not apply to non-resident buyers who do not have any PE in India.
Read the full text of CBDT Notification No. 99/2022 dated 17.08.2022 on Exclusion from Section 206C(1G)
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 17th August, 2022
INCOME-TAX
S.O. 3878(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”) and in suppression of the notification of the Government of India, Central Board of Direct Taxes published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii) vide number S.O. 1494(E), dated the 30th March 2022, except as respects things done or omitted to be done before such suppression, the Central Government hereby notifies that the provisions of sub-section (1G) of section 206C of the Act shall not apply to a person (being a buyer) who is a non-resident in terms of section 6 of the Act and who does not have a permanent establishment in India.
2. This notification shall come into force with effect from the date of publication of this notification in the Official Gazette.
[Notification No. 99/2022/F. No. 370142/9/2022-TPL Part (2)]
MRINALINI KAUR SAPRA, Director
Download CBDT Notification No. 99/2022 dated 17.08.2022 on Exclusion from Section 206C(1G) in PDF format
Read the full text of Notification No. 20/2022 dated 30.03.2022 (now withdrawn) 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.
Download Notification No. 20/2022 dated 30.03.2022 (now withdrawn) on Exclusion from Section 206C(1G) in pdf format
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