Tax Collection at Source, more popularly known as TCS, provisions mandate the seller to collect tax from the buyer and deposit the same to the Government. The provision of tax collection at source is contained under section 206C of the Income Tax Act, 1961 and the same are explained briefly in the current article.
Provisions of section 206C of the Income Tax Act, 1961 requires the specified seller to collect the tax from the specified buyer of the specified goods and at specified rates. The seller is liable to collect the tax at earlier of the following dates –
Listing the Specified goods, specified rates, specified seller and specified buyers –
The specified goods and specified rates of TCS are detailed herein below –
|Sr. No.||Specified goods||Specified rates|
|Section 206C (1) – Sale of goods –|
|1||Alcoholic Liquor made for human consumption||1%|
|3||Minerals (being coal / lignite / iron ore)||1%|
|5||Timber got under the forest lease||2.5%|
|6||Timber got under any other mode (except under the forest lease)||2.5%|
|7||Any other forest produce (except timber or tendu leaves)||2.5%|
|Section 206C (1C) – Contract / lease / licence|
|3||Quarrying and mining||2%|
|Section 206C (1F) – Sale of motor vehicle|
|1||Sale of a motor vehicle of the value more than INR 10 Lakhs||1%|
Points to be noted –
The specified sellers are listed here under –
The explanation (c) to section 206C provides the meaning of the term ‘seller’, and as per the same the following are the list of specified sellers who are required to collect tax (TCS) –
The specified buyers are listed here under –
The explanation (aa) to section 206C provides the meaning of the term ‘buyer’ and as per the same the buyer means the following –
|Buyer meaning with respect to specified goods mentioned in section 206C (1) –||Buyer meaning with respect to specified goods mentioned in section 206C (1F) –|
|A buyer with respect to section 206C (1) means a person who obtains in any sale, by way of auction / tender / or any other mode, the specified goods but doesn’t include the following –
It also doesn’t include the buyer in the retail sale of goods purchased by him for personal consumption.
|A buyer with respect to section 206C (1F) means a person who obtains in any sale the specified goods but doesn’t include the following –
Surcharge applicability –
In addition to the above specified TCS rates, the surcharge would be added if applicable as tabulated below –
|Non-resident Individual / a HUF / AOP / BOI||Aggregate amount collected exceeds INR 50 Lakhs but is less than INR 1 Crore||10%|
|Aggregate amount collected exceeds INR 1 Crore but is less than INR 2 Crore||15%|
|Aggregate amount collected exceeds INR 2 Crore but is less than INR 5 Crore||25%|
|Aggregate amount collected exceeds INR 5 Crore||37%|
|Non-resident co-operative society or a firm||Aggregate amount collected exceeds INR 1 Crore||12%|
|Company other than the domestic company||Aggregate amount collected exceeds INR 1 Crore but is less than INR 10 Crores||2%|
|Aggregate amount collected exceeds INR 10 Crore||5%|
The seller who is liable to collect tax is required to deposit the same to the Government on a monthly basis in Challan 281 within the following due dates –
|Sr. No.||Months||Due date|
It should be noted that the TCS collected by the Government office needs to be deposited on the same day of the collection.
The tax collector is required to submit TCS return quarterly in Form 27EQ. The due date for filing of the TCS return in Form 27EQ is tabulated here under –
|Sr. No.||Quarter||Due date|
|1||April to June||15th July|
|2||July to September||15th October|
|3||October to December||15th January|
|4||January to March||15th May|
The TCS collector is required to issue a certificate in Form 27D within 15 days of from the due date of filing of the TCS return. The due dates for the issuance of TCS certificate in Form 27D is summarized here under –
|Sr. No.||Quarter||Due date|
|1||April to June||30th July|
|2||July to September||30th October|
|3||October to December||30th January|
|4||January to March||30th May|
Frequently Asked Questions (FAQs) on TCS
1. What is Section 206C?
Provisions of section 206C of the Income Tax Act, 1961 provides that the seller is required to collect the tax from the buyer on the sale of certain specific goods.
2. Who will deduct TCS?
TCS is not deducted, in fact, it is collected by the seller from the buyer at the time of sale of certain specified goods.
3. What is the difference between tax deducted at source and tax collected at source?
TDS is the tax deductible before making payment to the Deductee, whereas, the TCS is the amount of tax collected by the seller from the buyer at the time of sale of the specified goods.
TDS is treated as an expense to the company, on the other hand, TCS is treated as an income to the company.
TDS is applicable on specified expenses when the amount paid exceeds the specified exemption limit, whereas, TCS is applicable on sale of certain specified goods.
4. Is tax collected at source refundable?
Yes, the tax collected at source by the seller (paid by the buyer) is in the form of tax which can be adjusted by the buyer against its tax liability. However, if the buyer doesn’t have the taxable income, then, the TCS can be claimed as a refund.
5. Is TCS collected on GST?
The CBIC has clarified that the taxable value for the purpose of goods and service tax (GST) shall include the amount of TCS.
|TDS Rate Chart for Financial Year 2019-2020|
|Section 192 – TDS on Salary|
|Section 192A – TDS on Premature withdrawal from EPF|
|Section 193: TDS on Interest on Securities|
|Section 194 – TDS on dividend|
|Section 194A: TDS on interest other than interest on securities|
|Section 194B and Section 194BB – TDS|
|Section 194C – TDS on Contractors|
|Section 194D – TDS on insurance commission|
|Section 194DA – TDS in respect of Life Insurance Policy|
|Section 194E – TDS on payment to Non-resident Sportsmen or Sports Association|
|TDS under Section 194EE and Section 194F|
|Section 194G TDS on Commission on Sale of Lottery Tickets|
|Section 194H – TDS on Commission or Brokerage|
|Section 194I of Income Tax Act, 1961 – TDS on Rent|
|Section 194IA TDS on transfer of immovable property|
|Section 194IB – TDS on Rent paid by Individual / HUF|
|Section 194LA: Payment of Compensation on acquisition of certain immovable property|
|TDS under Section 194LB, 194LBA, 194LBB and 194LBC|
|Section 194LC: TDS on income by way of interest from an Indian Company or a business trust|
|Section 194LD TDS on income by way of interest on certain bonds and Government Securities|
|Section 194J TDS on Fees for Professional or Technical Services|
|Section 194N – TDS on Cash Withdrawals|
|Section 194M: TDS on Payment of certain sum by certain Individual / HUF|
|Section 195 TDS on payment of any other sum to a non-resident|