TCS under Income Tax

TCS under Income Tax
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Last updated on July 4th, 2022 at 12:31 pm

The tax collected at the source is an additional amount of tax collected by the seller for the below-mentioned specified goods from the buyer. The amount of TCS that is deposited to the  Government is collected over and above the sale price. The tax is collected at a specified rate applicable to the specified goods. 

Who is supposed to collect tax at the source?


Only the following will be considered as sellers as per TCS mechanism u/s 206C

> Central Government
> State Government
> Local Authority
> Statutory Corporation/Authority
> Company registered under the Companies Act
> Partnership Firms
> Co-operative Society
> Individual/HUF subject to tax audit u/s 44AB

Note: TCS shall not be collected at source, if the buyer is Central Government, State Government, Embassy, High Commission, Public Sector Company, Social Clubs, Sports Clubs, Local Authority.

When TCS is not to be collected? | TCS exemptions


> When the eligible goods are used for personal consumption

> When the buyer purchases the goods not for the purpose of trading but for the purpose of manufacturing, processing, or production.

TAN (Tax collection Account Number)

  • The seller (Collector of tax) has to obtain a tax collection account number (TAN). 
  • TAN is to be quoted on all challans, returns, and TCS certificates issued by the seller.

List of goods covered by provisions of TCS

Section

Nature of Goods

TCS Rate

206C (1)

Sale of Alcoholic liquor for human consumption

1%

206C (1)

Sale of Tendu Leaves

5%

206C (1)

Timber obtained under a forest lease or any other mode than a forest lease

2.5%

206C (1)

Sale of any forest produce other than Tendu Leaves and timber

2.5%

206C (1)

Sale of Scrap

1%

206C (1)

Minerals like Lignite, Coal, and Iron Ore

1%

206C (1F)

Purchase of motor vehicle exceeding Rs 10 lakhs

1%

206C (1C)

Parking lot, Toll Plaza, mining and quarrying

2%

206C (1G)

Sales of Overseas Tour Program Package more than Rs 7 Lakh

5%

206C (1G)

Remittance under (Liberalised Remittance Scheme) LRS for education loan taken from the financial institution

0.5%

206C (1H)

Sale of goods exceeding Rs 50 Lakhs other than exported goods by seller whose total sales, gross receipts, or turnover is more than Rs 10 crores

0.1%

Note: Higher education cess @ 4% shall be calculated on TCS amount.

Note: Surcharge will also be calculated if payment from the buyer exceeds Rs 50 lakhs. 

Note: If the buyer fails to provide the details of PAN to the seller then TCS will be collected at double the rate or 5% whichever is higher. Note: In the case of TCS u/s 206C (1H) it will be 5% if PAN is not furnished.

Applicable Compliances with due date and penalty for failure

The seller needs to remit the tax collected source in Challan no. 281  to Government Account within one week from the end of the month in which it was collected. 

TCS collectors have to file quarterly returns in Form 27EQ to CPC-TDS in electronic mode within 15 days from the end of the quarter. (Note: For the last quarter of the financial year ending in March, TCS return can be filed within 45 days from the end of the quarter) 

TCS collectors have to furnish a TCS certificate in Form 27D within 15 days from filing the quarterly return. 

If the seller (TCS collector) who is supposed to collect TCS and remit to the Government fails to either collect TCS or remit the same to the Government then such a seller shall be considered an assessee in default and will have to face the consequences. 

 Particulars

TCS Payment

TCS Return

TCS Certificate

Month/Form

Challan no. 281

Form 27EQ

Form 27D

April

7th May

15th July

31st July

May

7th June

June

7th July

July

7th August

15th October

31st October

August

7th September

September

7th October

October

7th November

15th January

31st January

November

7th December

December

7th January

January

7th February

15th May

31st May

February

7th March

March

7th April

In case of failure to pay tax/file return/ issue certificate

Interest @ 1% p.m. on TCS amount

Penalty of Rs 200 per day

Penalty of Rs 100 per day

Sec 271CA – Penalty equivalent to TCS amount

Sec 276BB -Imprisonment up to 7 years

 

Disclaimer: The above content is for general information purpose only and does not constitute professional advice. The author/ website will not be liable for any false, inaccurate, incomplete information. Any reliance you place on above content is therefore strictly at your risk.

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About CA Ankita Khetan 196 Articles
Ankita is a Chartered Accountant in practice and holds a Diploma in IFRS (from ACCA, UK). She is also a Commerce PG and Certified Independent Director (from IICA). She holds a certification in Forex and Treasury Management. Her area of expertise is GST and Income tax. She is passionate about reading, writing, and sharing knowledge on areas related to finance and taxation.

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