Definition of “forest produce” rationalized for calculation of TCS [Budget 2025]

The Union Budget 2025 presented on 1st Feb, rationalized the definition of “forest produce” for calculation of TCS.

Forest Produce definition rationalized for calculation of TCS

Reetu | Feb 4, 2025 |

Definition of “forest produce” rationalized for calculation of TCS [Budget 2025]

Definition of “forest produce” rationalized for calculation of TCS [Budget 2025]

The Union Budget 2025 presented in parliament on 1st Feb 2025 by the Hon’ble Finance Minister Nirmala Sitharaman. Various changes in taxation proposed for the well being of the economy.

The definition of “forest produce” rationalized for calculation of TCS in the Budget.

Sub-section (1) of section 206C of the Act states that every seller shall collect tax at source from the buyer of goods of certain specified nature at the rates specified in the sub-section.

Under sub-section (1) of section 206C of the Act, presently TCS at 2.5 per cent is required to be collected on sale of goods of the following nature: –

(I) Timber obtained under a forest lease.

(II) Timber obtained by any mode other than under a forest lease.

(III) Any other forest produce not being timber or tendu leaves.

Representations were received that there is no definition of “forest produce” in the Act, which makes it impossible to apply the relevant provisions of the Act. Also the provision is being made applicable to traders who are selling such produce. To bring clarity regarding the meaning of “forest produce”, it is proposed that “forest produce” shall have the same meaning as defined in any State Act for the time being in force, or in the Indian Forest Act, 1927.

Further, it is proposed that to address the applicability of TCS on traders of forest produce, only such other forest produce (not being timber or tendu leaves) which is obtained under forest lease will be covered under TCS.

The amended rate for collection of TCS are as under:-

These amendments will take effect from the 1st day of April 2025.

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