Tax Collect at Source

TAX COLLECT AT SOURCE

Defination- Tax collected at source (TCS) is the tax collected by the seller from the buyer on sale so that it can be deposited with the tax authorities. Section 206C of the Income-tax act governs the goods on which the seller has to collect tax from the buyers. Such persons must have the Tax Collection Account Number to be able to collect TCS.

Goods on which TCS applicable and applicable tax rate- When the below-mentioned goods are utilised for the purpose of manufacturing, processing, or producing things, the taxes are not payable. If the same goods are utilised for trading purposes, then tax is payable. The tax payable is collected by the seller at the point of sale. The rate of TCS is different for goods specified under different categories.

S. No.	Type of Goods or Transactions	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	Forest produce other than Tendu leaves and timber	2.5%
6	Scrap	1%
7	Minerals like lignite, coal and iron ore	1%
8	Purchase of Motor vehicle exceeding Rs.10 Lakhs	1%
9	Parking lot, Toll Plaza and Mining and Quarrying	2%
10	Here total turnover is more than Rs.10 crores in the previous financial year and receives sale consideration of any products of more than Rs. 50 lakhs, such seller must collect TCS upon receiving consideration from the buyer on such amount over and above Rs.50 lakhs, as per Section 206C(IH). (Without PAN, then 1% is TCS)	0.1%

Time Of Collection of TCS- The seller must collect TCS at the earliest of following two dates-

At the time of debiting the money payable by the buyer in their books of accounts
On receipt of such money from the buyer in any mode such as cash, cheque, or draft.
In case of motor vehicle TCS is collected upon receipt of money or consideration for the motor vehicle from the buyer.

Classification of seller and buyer for TCS-No seller of goods can collect tax at source from the buyers apart from the following list:

Central govt.
State govt.
Local authority
Statutory corporation or authority
Company registered under companies’ act
Partnership
Co-operative society
Any person or HUF who is subject to an audit of accounts under I.T. act for a particular F.Y.

Buyer is a person who obtains goods of specified nature in any sale or right to receive any such goods, by way of auction, tender or any other mode.

TCS Payment and Returns-

All sums collected by an office of government should be deposit on the same day.
Tax is to be deposit monthly within 7 days from the last day of month.
If the tax collector responsible for collecting the tax and depositing the same to the government does not collect the tax or after collecting does not pay it to the government as per the above due dates, then he will be liable to pay interest @ 1% per month or part of the month u/s 206C(6A).
Every tax collector has to submit a quarterly TCS return i. e. in form 27EQ in respect of tax collected by him in particular quarter. The interest on delay in payment of TCS to the government should be paid before filing the return.

TCS Certificate- Form 27D is the certificate issued for TCS return filed. TCS certificate is to be issued within 15 days from the date of filing TCS quarterly return.

Quarter Ending	Due date to file TCS return in form 27EQ	Date of generating form 27 D
30 June	15 July	30 July
30 September	15 October	30 October
31 December	15 January	30 January
31 March	15 May	30 May

Exemption from TCS- There are 2 types of exemption.

TCS at lower rate- The buyer has the provision to apply to the Assessing Officer or AO for collecting the tax at source at a lower rate, with the help of Form 13, if the total income justifiable for lower rate.
Total tax exemption- The buyer has to declare in a Form 27C that he is eligible for total exemption from paying TCS. The declaration has to specify and prove that the goods that have been declared are intended for the purposes of processing and manufacturing and not trading.

Tax Collected at Source on Gold / Jewellery (TCS on Gold)

The tax collected on Bullion that exceeds over Rs. 2 lakhs and Jewellery that exceeds over Rs. 5 lakhs is collected at 1% of the amount being considered.

Penalty for non-furnishing TDS Return-

As per section 234E, where a person fails to file the TDS/TCS return on or before the due date prescribed in this regard, then he shall be liable to pay, by way of fee, a sum of Rs. 200 for every day during which the failure continues. The amount of late fees shall not exceed the amount of TDS/TCS.
The penalty under section 271CA gets attracted in case the seller fails to collect the TCS. The defaulter is liable to pay the penalty under section 271CA to the extent of a sum equal to an amount of tax not collected.

If the tax collector responsible for collecting the tax and depositing the same to the government does not collect the tax or after collecting does not pay it to the government as per the above due dates, then he will be liable to pay interest @ 1% per month or part of the month u/s 206C(6A).

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