TCS on sale of goods (206C(1H))
Withdrawn from 1 April 2025
Section 206C(1H) required sellers above ₹10 crore turnover to collect 0.1% tax from buyers on receipts above ₹50 lakh, and it stopped applying from 1 April 2025.
For four years this ran in parallel with the buyer's obligation under section 194Q, and reconciling the two consumed a great deal of accounting time: if the buyer deducted under 194Q, the seller was not to collect under 206C(1H), and establishing which had happened meant asking. Finance Act 2025 inserted a proviso making the section inapplicable from 1 April 2025.
A technical distinction worth knowing if you read the bare Act: the section was not deleted. It remains in the statute but is switched off prospectively. That is why a search still returns the section text, and why a good deal of published guidance — including material dated after the change — still describes the old parallel regime.
Transactions up to 31 March 2025 remain governed by the old rule, so historic reconciliations and assessments for those years are unaffected.
Key facts
- Inapplicable to transactions from 1 April 2025 onwards.
- Introduced by a proviso in Finance Act 2025; the section itself was not omitted.
- Section 194Q (the buyer's TDS obligation) is unchanged and continues to apply.
- Periods up to 31 March 2025 remain governed by the previous position.
- Other TCS provisions under section 206C, such as on scrap, are unaffected.
Who this affects
Sellers of goods above ₹10 crore turnover, who no longer need to collect — and anyone relying on guidance written before April 2025.
Reviewed September 2026. This is general information about how these rules work, not tax or legal advice, and thresholds and due dates do change. Check your own position with your chartered accountant before acting on it.