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



Nature of Goods

TCS Rate

206C (1)

Sale of Alcoholic liquor for human consumption


206C (1)

Sale of Tendu Leaves


206C (1)

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


206C (1)

Sale of any forest produce other than Tendu Leaves and timber


206C (1)

Sale of Scrap


206C (1)

Minerals like Lignite, Coal, and Iron Ore


206C (1F)

Purchase of motor vehicle exceeding Rs 10 lakhs


206C (1C)

Parking lot, Toll Plaza, mining and quarrying


206C (1G)

Sales of Overseas Tour Program Package more than Rs 7 Lakh


206C (1G)

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


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



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. 



TCS Payment

TCS Return

TCS Certificate


Challan no. 281

Form 27EQ

Form 27D


7th May

15th July

31st July


7th June


7th July


7th August

15th October

31st October


7th September


7th October


7th November

15th January

31st January


7th December


7th January


7th February

15th May

31st May


7th 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


CA Ankita Khetan
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Disclaimer: The above content is for general info purpose only and does not constitute professional advice. The author/ website will not be liable for any inaccurate / incomplete information and any reliance you place on the content is strictly at your risk.

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