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TCS – A Tax collected at source and its Rates

Priyanka Bajpayee

| Updated: Nov 08, 2019 | Category: Income Tax, Taxation

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.

    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%
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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

    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
    Priyanka Bajpayee

    Priyanka Bajpayee has done Masters in International Business Law and well versed in content writing covering the area of legal and finance. Also, she has practical experience of almost 1.5 years in Legal compliance and secretarial work.

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