Income Tax Taxation

Consequences of Non-Filing of TCS Return

As per Income Tax Act, 1961, a person must file TCS return, failing which he will be penalized under sections 234E, 271H of the Income Tax Act, 1961.

The person filing for a TCS return must follow the process laid down in the Income Tax Act, 1961.

In this article, we will look into the details of TCS return, its filing and consequences of non-filing.

What is TCS return?

TCS stands for Tax collected at Source. It is a tax levied by Government of India. The seller, who collects the tax from the buyer at the time of sale of goods, pays TCS. These goods or commodities are mentioned under Section 206C of the Income Tax Act, 1961. TCS return is merely a claim of refund of the tax collected by the seller.

The following are defined as sellers Central and State Government; Statutory Authority or Corporation; Company; Co-operative Society, Partnership Firms; or any individual who has gross receipts on the total sales, based on the previous year.

All individuals except the following are categorized as a buyer for TCS.

The exceptions are:

• Central or State Government.
• Public Sector Entities.
• Consulates & any other trade representations of a Foreign Nation.
• Embassies.
• Clubs (includes social or sports club).

How is TCS return different from TDS?

TCS and TDS return both are incurred based on income. These are, though, used to collect taxes, yet they are different from each other.

• TCS is the tax, which is collected by the sellers while selling goods to the buyers. On the other hand, TDS is the tax that the company deducts on making payment to an individual when the amount exceeds a certain limit.
• TCS is applicable to the sales of goods like timber, mineral, etc. Whereas TDS is applicable on payments like salaries, rent, professional fee, etc.
• TCS is applicable on the sales of specific goods which don’t include production or manufacturing material. Whereas TDS is applicable only on the payments when it exceeds the limit.

What are the duties of a person liable for TCS return?          

A person liable for TCS return must follow the following rules:

• He must obtain a Tax Collection Account Number (TAN) and must cite the same in all the documents related to the TCS return.
• The tax must be collected at the applicable rate.
• The tax collected by him must be paid as a credit to the Government.
• He shall file the TCS statement periodically.
• He must issue the TCS certificate in relation to the TCS collected.

What is the process of uploading the TDS/TCS?

The user can upload the TCS statement quarterly by following the steps:

• Visit www.incometaxindiaefiling.gov.in
• Log in through the TAN and the Password.
• After login, go to TDS menu>>Upload
• Fill the required details and then verify
• Upload the necessary attachments
• On successful completion, a transaction ID & the token number will appear. You can check the status through the token number.

Due Dates for filing of TDS/TCS return

Form 27EQ contains all details related to the tax collected at Source. This form should be filed every quarter and submitted by both the Government & the Corporate, as stated under Section 206C of the Income Tax Act, 1961.

The due date for submitting Form 27Q is given in the table below:

Form 27Q	Due Date
1st quarter (ending on 30th June)	31st July
2nd quarter (ending on 30th September)	31st October
3rd quarter (ending on 31st December)	31st January
4th quarter (ending on 31st March)	31st May

Penalty

For a person who fails to collect or remit a TCS return, an equal amount of penalty will have to be paid.

The provisions under which the penalty is levied:

• Section 276B of the Income Tax Act states that when a person fails to pay the tax to the credit of Central Government within the stipulated time period, he must be punished with 3 months to 7 years rigorous imprisonment along with a fine.
• Section 234E for a late fee ofRs. 200 per day has to be paid as a late fee from the date of the due date of TCS return filing. Though the amount will not be more than Rs. 5000.
• Section 271H, the AO (Assessing Officer) can impose a fine of Rs. 10,000 to Rs. 1, 00,000, in case of non-filing of TCS return within the due date. The penalty or fine under this section is in addition of the late fee u/s 234E. Also, incorrect filing of TCS return is covered under this section.

• If the following conditions are satisfied, then no penalty will be levied u/s 271H for delay in filing the TCS return:
• The tax collected is paid to the credit of the Government.
• Late fees & the interest are paid to the credit of the Government (if applicable).
• The TCS return is filed before expiry of one year from the due date.

Conclusion

It is thus vital to keep track of the taxes paid by a person. A person must be attentive to the TCS and must file the TCS return within the due date. TCS can be collected by the seller from the buyer while selling some goods.

Thus, TCS & TDS is different, but it is a way to save taxes by claiming a refund.

Read our article:GST Registration for Ecommerce Collecting TCS