This was followed by introduction of Tax Deduction at Source (TDS) on purchase of goods, resulting into interplay in applicability of TDS and TCS on transactions involving goods w.e.f 1 July 2021.
In order to ascertain applicability of TDS v/s TCS provisions, sellers are required to understand whether buyer’s turnover in previous year exceeded INR 100 mn. Further, where TCS continues to apply, sellers are required to under due diligence of buyer’s tax return filing status for previous two years, on crossing of certain monetary thresholds.
Expansion of TCS provisions and subsequent interplay between TDS and TCS provisions for transactions involving goods requires businesses to review the impact, collate declarations from buyers, undertake compliance check validations, create robust framework backed by data extraction, reconciliation capabilities to effectively comply with the new Tax Collected at Source provisions.
EY-SAP survey: Key findings
The key findings of EY-SAP survey* on preparedness of industry to adopt this new regime are as follows: