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

Category of Buyer

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

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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-

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.