(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:
