‘Unit’ of IFSC Shall Not Be Considered as a Buyer for Sec. 206C(1H) TCS | CBDT

Notification No. 6/2025, dated 06-01-2025

Section 206C(1H) prescribes the provision of tax collection by a seller who receives any amount as consideration for the sale of any goods if the aggregate value of such sale consideration received in any previous year exceeds Rs. 50 lakh. The explanation to section 206C(1H) defines the meaning of buyer as a person who purchases any goods, but does not include:

a) the Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or

b) a local authority as defined in the Explanation to clause (20) of section 10; or

c) a person importing goods into India or any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein

In this regard, the Central Government, vide Notification No. 6/2025, specified that a Unit of the International Financial Services Centre shall not be considered as buyer for the purposes of the said sub-section in respect of the purchase of goods from a seller, subject to the following conditions, namely:

a) The buyer shall:

i) Furnish a statement-cum-declaration in Form No. 1A to the seller giving details of previous years relevant to the ten consecutive assessment years for which the buyer opts for claiming deduction under sub-sections (1A) and (2) of section 80LA; and

ii) such statement-cum-declaration so furnished shall be verified in the manner specified in the said Form for each previous year relevant to the ten consecutive assessment years for which the buyer opts for claiming deduction under sub-sections (1A) and (2) of section 80LA;

b) the seller shall:

i) Not collect tax on payment received from the buyer after the date of receipt of copy of statement-cum-declaration from the buyer; and

ii) Furnish the particulars of all the payments received from the buyer on which tax has not been collected in section 206C(3) read with rule 31AA of the Income-tax Rules, 1962.

This relaxation shall be available to the buyer only during the said previous years relevant to the ten consecutive assessment years as declared by the buyer in the said Form for which deduction under section 80LA of the said Act is being opted, and the seller shall be liable to collect tax on payments received for any other year. This notification is effective from 1st day of January, 2025.

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