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TCS (Tax Collected at Source) is a tax that is collected by the seller from the buyer and deposited to the account of the government on behalf of the buyer.

As such, there are no TDS/ TCS provisions on the Sale of Goods other than the sale of special category goods like Alcohol, Tobacco, Tendu Leaves, Timber wood, Minerals, Motor vehicles of more than 10 Lakhs, etc.

Thus, the government has introduced a provision where the seller has to collect TCS on the sale of any type of goods subject to some conditions.


Section 194Q – TDS on Purchase of Goods (w.e.f. 1st July 2021)

Difference between Section 194Q and Section 206C(1H)

Now, let us look at the conditions and application of this provision.



This provision has been made applicable from 1st October 2020.

TCS shall be applicable where the seller receives any amount as consideration of more than Rs. 50 Lakhs from a single buyer for the sale of ANY GOODS.

Seller may be any person i.e. it can be Individual, Firm, AOP/BOI, Company, or any other form.

When to Collect

The TCS has to be collected at the time of receipt of such amount i.e. TCS shall be collected on a Receipt Basis.

Rate and Ceiling Limit

TCS shall be collected at the rate of 0.1% of the amount in excess of Rs. 50 Lakhs.

If the buyer does not have PAN no. then the rate shall be 1 %.

(Note: – TCS rate has been reduced to 0.075% for the period 1st October 2020 to 31st March 2021.)

Non- Applicability

TCS shall not be applicable in the following cases: –

  • Where the turnover of the Seller is less than 10 crore in the preceding Financial Year.
  • Where the goods are exported out of India.
  • Where any TDS provision is applicable to such goods.
  • Where the buyer is the Central Government, State Government, Embassy, High Commission, legation, or trade representation of a foreign state.
  • Where the buyer is a local authority as per Explanation to Section 10(20).
  • Where the seller is dealing with the following goods: –
Items Section for TCS
– Alcoholic Liquor for human consumption

– Tendu leaves

– Timber obtained under a forest lease

– Timber obtained by any mode other than under a forest lease

– Any other forest produce not being timber or tendu leaves

– Scrap

– Minerals, being coal or lignite or iron ore

Section 206C(1)
Motor vehicle (if the value exceeds 10 Lakhs) Section 206C(1F)
– Sum of money (above 7 Lakhs) for remittance out of India

– Seller of an overseas tour program package

Section 206C(1G)

Due Date of making payment of TCS to Government

The TCS collected by the seller shall be paid to the account of the Government by the 7th of the next month in which the TCS is collected.

(Example: – For the month of October, Due Date of the deposit is 7th November.)


Due Date of Filing of Return by the seller

The Seller has to file a return in Form 27EQ on a Quarterly basis.

Due Dates of filing of Form 27EQ are: –

Quarter Due Date (Normally)
April – June 15th July
July – September 15th October
October – December 15th January
January – March 15th May

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About CA Mehul Gupta 30 Articles
Chartered Accountant in practice, Certified GST Practitioner & Commerce Graduate. He is mainly engaged in the practice of Direct taxes, GST, International taxation, & assurance services. A visiting faculty in the Faridabad Branch of ICAI.

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