3589648 - Omission of TCS on sale of goods Sec 206C(1H) - FI-CA (Private Cloud)

Introduction
This announcement contains information about the legal change of the omission of tax collected at source (TCS) under section 206C(1H) in Budget 2025, published on February 1st, 2025 by the Ministry of Finance in India.
The effective date is April 1, 2025.
This information is based on legislation and regulations which could be subject to change at any time by the respective authorities. The information will be updated if required.

Business Background/Impact
Currently, a supplier of goods is required under section 206C(1H) of the Income Tax Act to collect TCS at 0.1% on transactions that exceed 5 million INR (Indian Rupees). This means that either a supplier is responsible for collecting TCS from the customer or the customer is required to deduct tax deducted at source (TDS) on payments made to the supplier for the same transaction. However, this requires an understanding of the other business partner’s turnover. A law was passed in the budget 2025 to simplify business operations and reduce the compliance burden on taxpayers. The law states that the provisions of TCS are proposed to no longer apply as of April 1, 2025.

Reference to Related Legislation and Additional Sources

• https://www.indiabudget.gov.in/doc/memo.pdf
• More details see via regulatory change manager tool under 'Omission of TCS on sale of goods Sec 206C(1H)'.

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