The current article clears up all the basic concepts of TCS (Tax Collection at Source) like provisions of TCS; rate of TCS; payment of TCS; filing of TCS return; issuance of TCS certificate; exemptions; interest and late fees and FAQs.
What is TCS?
Basics of TCS-
Section 206C of the Income Tax Act deals with the TCS provisions. The same is simplified hereunder-
| Person liable to collect TCS | Seller, of specified goods, being any of the following-
|
| Specified goods covered under TCS | List of goods on which seller is liable to collect TCS are-
|
| Time of collection of TCS | Earlier of the following period-
|
What are rates of TCS?
Rate of TCS-
The seller of specified goods is required to collect TCS at the following rates-
| Specified goods | Corresponding rates at which TCS is to be collected |
| Tendu Leaves | 5.00% |
| Timber obtained from forest lease or by any mode other than forest lease | 2.50% |
| Alcoholic liquor for human consumption | 1.00% |
| Any other forest produced (other than timber or tendu leaves) | 2.50% |
| Scrap | 1.00% |
| Minerals (coal or lignite or iron ore) | 1.00% |
| Sale of motor vehicle exceeding INR 10 Lakhs | 1.00% |
| Parking lot, toll plaza or mining and quarrying | 2.00% |
| Seller of an overseas tour program package | 5.00% |
| Any goods [except goods specified under section 206C(1), 206C(1F) and 206C(1G)] sold for consideration exceeding INR 50 Lakhs | 0.10% |
Payment of TCS-
Provision of rule 37CA defines the time period within which tax collected is to be deposited with the Government. The same is explained hereunder-
| Particulars | Payment due date |
| Sum collected by Government office |
|
| Sum collected by offices other than Government office | Within one week from the end of the month in which tax is collected. |
Filing of TCS return-
As per provision of rule 31AA, every collector of TCS is required to furnish TCS return in Form 27EQ. Notably, the time limit for furnishing the quarterly TCS return within the following due dates-
| Particulars | Due date for filing TCS return |
| April – June | 15th July |
| July – September | 15th October |
| October – December | 15th January |
| January – March | 15th May |
Issuance of TCS certificate-
Provisions of rule 37D require the TCS collector to issue a TCS certificate in Form 27D within a period of 15 days from the date of furnishing of TCS return. Accordingly, the collector is required to issue a TCS certificate within the following due dates-
| Particulars | Due date for filing TCS return |
| April – June | 30th July |
| July – September | 30th October |
| October – December | 30th January |
| January – March | 30th May |
Exemption available under TCS tax-
The seller is not liable to collect TCS under the following situations-
1. Buyer of the specified goods is any of the following-
a. A public sector company,
b. The central government,
c. A state government,
d. An embassy, a high commission, commission, legation, consulate and trade representation of a foreign state or club.
2. Buyer, in retail sale, purchases the goods for personal consumption.
3. Buyer purchases the goods either for manufacturing or processing or production. Here, such goods shouldn’t be purchased for trading.
Interest and late fees under TCS-
Applicable interest and late fees for non-complying with various provisions of TCS are tabulated hereunder-
| Section | Particulars | Interest and late fees |
| Section 206C(7) | Interest for non-collection or non-deposit of TCS | 1% per month or part of month |
| Section 271CA | Penalty for non-collection of TCS | Amount equal to TCS not collected. |
| Section 271H | Penalty for non-furnishing of TCS return | Minimum penalty – INR 10,000
Maximum penalty – INR 1 Lakhs. |
| Section 276BB | Punishment for non-deposit of TCS | Fine and imprisonment for a minimum period of 3 months and a maximum period up to 7 years. |
FAQs-
Q.1 What is TCS tax?
TCS (Tax Collection at Source) is a tax that is payable by the seller after collecting the same from the buyer at the time of sale of the goods.
Q.2 What is TCS tax with example?
TCS is a tax collected by the seller from the buyer of the goods. For example-
Mr. A buys a scrap of INR 10,000 from Mr. B. Mr. B, being a seller, will be liable to collect TCS @1% on scrap sold to Mr. A. Accordingly, it will collect INR 10,100 [INR 10,000 sale consideration + INR 100 TCS].
Q.3 What is TCS tax in GST?
TCS under GST means the tax which is collected by the e-commerce operator from supplying goods/ services through their online platform.
Q.4 Is TCS tax refundable or not?
TCS tax paid by the buyer of the goods is credited against its PAN. Accordingly, the same is added to the tax payment of the buyer. TCS tax can be refunded, if the buyer is not able to utilize the same.
Q.5 What is the difference between TDS and TCS?
TDS is tax deducted on payment exceeding specified limits, whereas, TCS is a tax collected by the seller on selling specified goods. Further, TDS is applicable on payments like salary; rent; interest; professional fees etc. whereas, TCS is applicable on the sale of goods like scrap; timber; tendu leaves; etc.
Q.6 Is TDS and TCS applicable on the same transaction?
Applicability of TDS and TCS on the same transaction is possible only under TDS section 194Q and TCS section 206C(1h). Notably, provisions of section 194Q clearly state that TDS is deductible even if TCS is collected under section 206C(1h).
Accordingly, if TDS is deducted under section 194Q, the seller will not be required to collect TCS under section 206C(1h).
Watch Our Video on TCS under Income Tax Act, 1961
Author Bio
refund if buyer cany utilize same means
A Ltd. sells scrap to B Ltd for Rs 10,000 + 12% GST on it (i.e. total sale including GST is Rs 11,200/-). Now, TCS is levied @1% on total collection of Rs 11,200/- and thus TCS will be Rs 112/-.
What will be the amount to be shown in TCS return (27EQ) as ‘Amount collected by deductor’? Rs 10,000/- or Rs 11,200/-?
the amount to be shown in TCS return (27EQ) is 11200/-