A trader is liable to deduct TCS (Tax Collected at Source) on the sale of goods under Section 206C(1H) of the Income Tax Act, subject to the following conditions:

1️⃣ Applicability of TCS on Sale of Goods (Sec 206C(1H))

✔️ The seller must have a turnover exceeding ₹10 crore in the previous financial year.
✔️ TCS applies when the buyer purchases goods worth more than ₹50 lakh in a financial year.
✔️ TCS is applicable only on the amount exceeding ₹50 lakh.

2️⃣ TCS Rate on Sale of Goods

✔️ 0.1% of the amount exceeding ₹50 lakh (If PAN is available).
✔️ 1% if the buyer does not provide a PAN or Aadhaar.

3️⃣ When to Collect & Deposit TCS?

✔️ TCS should be collected at the time of receipt of payment from the buyer.
✔️ It must be deposited with the government by the 7th of the next month.

4️⃣ Exemptions from TCS on Sale of Goods

❌ TCS is NOT applicable if:

• The buyer is the government, embassy, RBI, or public sector company.
• The sale is already subject to TDS under any other provision.

✅ Example:
If a trader has a turnover of ₹12 crore in the last financial year and sells goods worth ₹60 lakh to a customer, TCS will be applicable on ₹10 lakh (₹60 lakh – ₹50 lakh).

TCS Calculation:
👉 TCS @0.1% on ₹10 lakh = ₹1,000 (if PAN is available).

Procedure for Obtaining a Lower TDS Deduction Certificate under the Income Tax Act (Section 197)

A taxpayer can apply for a Lower TDS Deduction Certificate under Section 197 of the Income Tax Act if they believe that their total income justifies a lower or nil rate of TDS deduction. The procedure is as follows:

Step-by-Step Process to Obtain Lower TDS Certificate

Step 1: Eligibility Check

✔ The applicant should be earning income where TDS is applicable (e.g., salary, interest, professional fees, rent, etc.).
✔ The applicant must justify that the TDS deduction at normal rates would result in excess tax deduction leading to a refund situation.

Step 2: Online Application on TRACES Portal

1. Login to TRACES (https://www.tdscpc.gov.in/) using the taxpayer’s PAN and password.
2. Go to “Statements / Forms” > “Request for Form 13 (Lower/Nil Deduction Certificate)”.
3. Fill in the details:
   • Personal details (PAN, Address, Contact Info, etc.)
   • Financial details (Income, Deductions, Tax Liability, etc.)
   • Nature of income for which lower TDS is requested
   • Justification for lower deduction (like previous year’s tax filings showing refund situations).
4. Attach supporting documents:
   • Computation of estimated total income and tax liability
   • Copies of previous years’ ITRs
   • Financial statements (if applicable)
   • Relevant agreements, contracts, or invoices
5. Submit the application online.

Step 3: Processing by the Assessing Officer (AO)

✔ The Assessing Officer (AO) reviews the application and may request additional documents.
✔ If satisfied, the AO will issue a Lower/Nil TDS Deduction Certificate (Form 13).
✔ The certificate specifies the validity period and applicable TDS rate (which could be lower than the standard rate).

Step 4: Submission to Deductor

✔ The taxpayer must provide the lower TDS certificate to the deductor (payer).
✔ The deductor will deduct TDS at the specified lower rate instead of the standard rate.

Key Points to Remember:

✔ Validity: The certificate is valid for a financial year or a specific period mentioned in the approval.
✔ Deadline: Apply at the beginning of the financial year to avoid excess TDS deductions.
✔ Form 15G/15H: For individuals with income below the taxable limit, Form 15G (for non-senior citizens) or 15H (for senior citizens) can be submitted instead of Form 13.