If your turnover exceeds 10 Crore for the previous year then it is now necessary to check every month for two things-
First is there any Debtors to whom the sales exceeds 50 lacs if yes then- you have to give them declaration stating that we will deduct TCS & if they are liable to deduct TDS u/s 194Q then we will not collect tax.
Second is there any creditor from whom the purchases exceeds 50 lacs if yes then- you have to give them declaration stating we will deduct TDS u/s 194Q.
Below are the format which will assist you to send declaration to party.
Seller to Buyer format
(On
the Letterhead of Seller)
To,
(Buyers
Name & Address)
Sub:
Regarding declaration due changes in provision under Income Tax Act-1961
Dear
Sir / Madam,
We,
________________________, having PAN______________ hereby inform you that our
total sales/gross receipts/turnover during financial year 2020-21 was more
than Rs.10 Crore. Therefore, provisions of Section 206C(1H) are applicable
for the purpose of collection of tax at source on receipt of sale
consideration of goods purchased by you during the current financial year on
the amount exceeding Rs.50 lacs. In relation to compliance with above
provisions we require following information / declaration from you: –
1.
As you know that w.e.f. 01.07.2021 Section 194Q is applicable.
In case you are liable to deduct tax under section 194Q of the Act, tax
will not be collectible by our company under section 206C(1H) of the Act
w.e.f. 01.07.2021.
Please
confirm that you are liable to deduct tax at source under section 194Q of the
Act from payment of purchase consideration to be made / credited to us. On
receipt of above confirmation, we will not be taking any action for
collection of tax at source as per section 206C(1H) of the Act, otherwise
we will be collecting tax from you as per above Section.
2.
You are also requested to intimate us for your Permanent Account
Number. In case you fail to provide your PAN, tax will be deducted at the
rate of 1 percent instead of 0.1 percent in terms of Section 206CC of the
Act.
3.
Further, you are also required to confirm that in your case
amount of TDS/TCS was Rs.50,000/- or more in previous years relevant to
Assessment Years 2019-20 and 2020-20 and you have filed your returns of
income for these assessment years as per section 139(1). Please also
provide acknowledgement numbers for filing the same, otherwise tax is
required to be deducted at the rate of 5 percent in terms of Section
206CCA of the Act.
You
may send to us your declaration in the enclosed draft on or before 20.06.2021
to enable us to take note of same and modify our accounting software
accordingly. In case your declaration is not received by us by the above
date, we will modify our software to collect tax at the rate of 5
percent and charge TCS u/s 206C(1H). It would be difficult for us to take
corrective action to reduce the rate during the current financial year.
Thanks
& Regards,
For
________________Ltd.
Authorised
Signatory
[Seller]
Date
:
Place:
Buyer to Seller format
To,
[Name & Address of Seller]
Sub: Declaration / information for deduction of tax
at source u/s 194Q of the Income Tax Act-1961
Dear Sir,
This is with reference to your letter dated
_________ requiring our declaration /information regarding Collection of tax at
source u/s 206C(1H) of the Income Tax Act.
The information is being provided hereunder:
1. Turnover of our company during Financial Year
2020-21 was more than Rs. 10 Crores. Therefore, our company is liable to
deduct tax u/s 194Q of the Act @ 0.1 % of sale consideration to be paid /
credited to your company on or after 01.07.2021 by us on the amount
exceeding Rs.50 lacs during the current financial year. Hence, we request
you not to take any action to collect tax under section 206C(1H) of the
Act.
Or
Turnover of our company during Financial Year
2020-21 was not more than Rs. 10 Crores. Therefore, our company is not
liable to deduct tax u/s 194Q of the Act. You may, therefore, continue to
comply with provisions of Section 206C(1H) of the Act to collect tax on
the amount of sale consideration exceeding Rs. 50 lacs.
2. Permanent Account Number of our company is
________. Further we have duly filed our returns of income for Assessment
Years 2019-20 and 2020-21 as per information given hereunder:
A.Y. Date of Filing return Acknowledgement No.
2019-20
2020-21
Please take note of above information and
confirmation and collect tax at the appropriate rate taking cognizance of
above information.
Thanks & Regards
_______________________
[Buyer]
Hope this article will help you out, If you think we can add more in this format then please comment & let me know the changes.
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