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Income Tax Taxation

TCS – A Tax collected at source and its Rates

Priyanka Bajpayee
25 May, 2023 25 May, 2023
TCS A-Tax-collected-at-source-and-its-Rates

TCS stands for Tax Collected at Source and, it is the tax payable by a seller which the seller collects from the buyer at the time of sale. Section 206C of the Income-tax Act 1961[1], governs the goods fall under Tax Collected at Source, where the seller has to collect tax from the purchases. Income Tax Act has provisions for the tax collected at source and under these provisions; specified persons are required to collect a specified percentage of tax from their buyers. TCS is collected on exceptional transactions i.e. trading or business.

Categorization of Seller and Buyer for Tax Collected at Source

For tax collected at source, there are some specific people and organizations that have been classified as sellers. The below-mentioned person is treated as SELLER who can collect tax at source from the buyers along with the list of the BUYER.

Category of Seller


  • Central Government

  • State Government

  • Local Authority

  • Statutory Corporation or Authority

  • Company registered under the Companies Act

  • Partnership firms

  • Co-operative Society

  • Any person or HUF who is subjected to an audit of accounts under Income tax act for a particular financial year.

    • Category of Buyer


    1. Public sector companies

    2. Central Government

    3. State Government

    4. Embassy of High Commission

    5. Consulate and other Trade Representation of a Foreign Nation

    6. Clubs such as sports clubs and social clubs

    Goods covered under and Applicability of Tax rates

    When the buyers and sellers deal in the
    goods utilized for trading, TCS is payable and the tax payable is collected by
    the seller at the point of sale.

    READ  Provisions related to cash transactions under Income Tax

    Note -Tax Exemptions

    • The goods mentioned in the list, if utilized for the purpose of
      manufacturing, production or processing things the taxes are not payable by the
      buyer.
    • When the eligible goods are used for personal consumption

    Goods specified under different categories have
    different TCS rates

    S. No Types of goods on
    which TCS is payable    		 TCS Rate
    1. Liquor of alcoholic
    nature, made for consumption by humans    		 1%
    2. Timber wood under a
    forest leased    		 2.5%
    3. Tendu leaves 5%
    4. Timber wood by any
    other mode than forest leased    		 2.5%
    5. A forest produces other
    than Tendu leaves and timber    		 2.5%
    6. Scrap 1%
    7. Minerals like lignite,
    coal and iron ore    		 1%
    8. Bullion that exceeds
    over Rs. 2 lakhs/ Jewellery that exceeds over Rs. 5 lakhs    		 1%
    9. Purchase of Motor
    vehicle exceeding Rs. 10 Lakhs    		 1%
    10. Parking lot, Toll Plaza
    and Mining and Quarrying    		 2%

    S. No Types of goods on
    which TCS is payable    		 TCS Rate
    1. Liquor of alcoholic
    nature, made for consumption by humans    		 1%
    2. Timber wood under a
    forest leased    		 2.5%
    3. Tendu leaves 5%
    4. Timber wood by any
    other mode than forest leased    		 2.5%
    5. A forest produces other
    than Tendu leaves and timber    		 2.5%
    6. Scrap 1%
    7. Minerals like lignite,
    coal and iron ore    		 1%
    8. Bullion that exceeds
    over Rs. 2 lakhs/ Jewellery that exceeds over Rs. 5 lakhs    		 1%
    9. Purchase of Motor
    vehicle exceeding Rs. 10 Lakhs    		 1%
    10. Parking lot, Toll Plaza
    and Mining and Quarrying    		 2%
    READ  How to save Capital Gains Tax on the Sale of Land?

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    What are the due dates of filing the return
    and making the payment to the government?

    The due date for filing the return and
    making the payment is as follows-

    Months
    of collection    		 Quarter-end Due
    date of payment    		 Due
    date of filing return
    APRIL  
    30TH
    JUNE    		 7TH
    MAY    		 15TH
    JULY
    MAY 7TH
    JUNE
    JUNE 7TH
    JULY
    JULY  
    30TH
    SEPTEMBER    		 7TH
    AUGUST    		 15TH
    OCTOBER
    AUGUST 7TH
    SEPTEMBER
    SEPTEMBER 7TH
    OCTOBER
    OCTOBER  
    31ST
    DECEMBER    		 7TH
    NOVEMBER    		 15TH
    JANUARY
    NOVEMBER 7TH
    DECEMBER
    DECEMBER 7TH
    JANUARY
    JANUARY  
    31ST
    MARCH    		 7TH
    FEBRUARY    		 15TH
    MAY
    FEBRUARY 7TH
    MARCH
    MARCH 7TH
    APRIL

    Note

    The seller deposits the TCS amount within 7 days in Challan
    281     from the last day of the month in which the tax was collected and If in
    any case, the tax collector does not collect the tax or after collecting
    doesn’t pay it to the government as per above due dates, then he will be liable
    to pay interest of 1% per month or a part of the month.

    Tax Collector is the person responsible for
    collecting the tax and depositing the same to the government

    READ  Section 80G of the Income Tax Act 1961: An Overview

    A quarterly TCS return i.e. Form 27EQis required to be submitted by every tax collector in respect of the tax collected by him in a particular quarter.

    The interest on delay in
    payment of TCS to the government should be paid before filing of the return.

    When the certificate of TCS is issued?

    A certificate is
    issued for TCS return filed in Form 27D, as when the tax collector files
    his quarterly TCS return i.e.  Form 27EQ, he has to provide a TCS
    certificate     to the buyer of the goods. The TCS certificate contains the
    following details of the seller and the buyer both i.e.

    • Name and PAN of
      both the seller and the buyer,
    • TAN of the
      seller,
    • A Sum of Tax
      collected by the seller from the buyer,
    • Date of
      collection and rate of tax applied to the goods.

    Time Duration for
    issuance of TCS certificate

    The TCS
    certificate is required to be issued within 15 days from the date of filing the
    quarterly return i.e.

    Quarter Ending Date for
    issuing the TCS certificate
    Quarter ending
    on 30th June    		 30th July
    Quarter ending
    on 30th September    		 30th October
    Quarter ending
    on 31st December    		 30th January
    Quarter ending
    on 31st March    		 30th May

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