TCS: Intro, TCS Rates 2020, Payment, Deduction, Return, Due Dates
Tax Collected at Source, Latest TCS Rates in India, TCS means collection of tax at source by the seller (collector) from the buyer (collectee/payee) of the goods (specified u/s 206C of Income-tax Act, 1961, like timber obtained under forest lease, scrap, any other forest produce not being timber or tendu leaves etc.,). For e.g. if purchase value of goods is Rs.10,000/-, the buyer will pay an amount of Rs.10,000/- + X (X being the value of TCS as prescribed under Income-tax Act, 1961) to the seller. The seller will deposit the tax collected at source (TCS) at any of the designated branches of the authorised banks. Now you can scroll down below n check more details related to Tax Collected at Source, Latest TCS Rates in India
Tax Collected at Source
TCS (Tax Collected at Source) are one of the mode through which government gets revenue instantly at the time of generation of Income. TDS/TCS provisions play a very important role in maintenance of liquidity of fund to the Government of India. Government gets approximately more than 40 per cent revenue in current fiscal year from TDS and TCS. It helps Government in minimizing tax evasion. It make cautious to tax payers while calculating his annual income and get credit of TDS/TCS as reflected in form 26AS or TDS certificate issued by deductor. It is important for tax professionals because they have to execute and complete the whole process of TDS provisions on behalf of clients
Just like TDS, Income Tax also includes TCS within its ambit. In this article, we will study about TDS versus TCS & all the aspects related to TCS.
Difference between TDS & TCS:
| Tax Deducted at Source | Tax Collected at Source |
| Generally, tax is required to be deducted at the time of credit to the account of the payee or at the time of payment, whichever is earlier. | Generally, tax is required to be collected at the source at the time of debiting the amount payable by the buyer of certain goods to the account of the buyer or at the time of receipt of such amount from the said buyer, whichever is earlier. |
Provision for TCS
Profits and gains from the business of trading, grants of lease or license, sale of motor vehicle under section 206C as Income tax collected at source i.e. TCS
- Every person , being a seller shall at the time of debiting of the amount payable by the buyer to the account of buyer or at the time of receipt of such amount from the said buyer, whichever is earlier, collect from the buyer of such amount as income tax.
- TCS shall not be collected if buyer declares that purchase of goods shall be utilized for the purpose of manufacture, processing or producing articles or things.
Rates of Tax Collected at Source :
| Nature of Goods | Rate of TCS |
| Alcoholic liquor for human consumption(Other than Indian made foreign liquor) | 1% |
| Indian made foreign liquor | 1% |
| Tendu Leaves | 5% |
| Timber obtained under a forest lease | 2.5% |
| Timber obtained by any mode other than above | 2.5% |
| Any Other Forest Products other than timber or Tendu leaves | 2.5% |
| Scrap | 1% |
| Minerals, being coal or lignite or iron ore | 1% |
| Grant of lease/license of parking lot, toll plaza, mining quarrying other than mineral oil, petroleum and natural gas | 1% |
| Sale of motor vehicles value exceeding Rs. 10 lakhs | 1% |
Time of Deposit of TCS
| By an office of the Govt. and tax is paid without production of income tax challan. | TCS: On the same day on which tax is deducted |
| By an office of Govt. and tax is paid accompanied by Income tax challan (ITNS281) | On or before 7 days from the end of month in which tax is deducted |
| Tax is deducted/ collected by a person other than office of Government | TCS: On or before 7 days from the end of month in which tax is collected. |
TCS Payment
- TCS should be deposit in Challan No. 281
- TCS will have to deposit through internet banking.
- Indicate accurate PAN in challan
- Minor Head of Challan – 200 : TDS payable by tax payer
- Minor Head of Challan – 400: TDS Regular assessment raised by Income Tax Department.
- Amount of TDS, Interest, Late filing fee, penalty etc, should be separately shown while filing the challan
- Note down BSR code, Challan serial number, Date of payment, and amount of challan. This will help you in case challan is misplaced.
TCS Return forms to be submitted Quarterly
| Tax Collection (TCS) | In form No. 27EQ |
Due Date of Submission of TCS Quarterly Return
| Quarter ending | Due date of TCS Return |
| June 30 | July 15 |
| September 30 | October 15 |
| December 31 | January 15 |
| March 31 | May 15 |
MODE OF FURNISHING QUATERLY RETURNS OF TDS/TCS
- In case where deductor or collector are an office of Govt. or Principal officer of a company or is person who is required to get his account audited u/s 44AB in immediately preceding financial year or when the numbers of deductee’s/collectee’s are more than 20, then TDS/TCS quarterly return shall be submitted electronically.
- Other than above, any other deductor/collctor can submit TDS/TCS return either in paper format or electronically.
- Electronic return can be uploaded with Digital signature or verification of form 27A electronically
- Electronic return will be uploaded in FVU file
- FVU file can be generated through e TDS/TCS RPU (return prepare utility) which is available in https://www.tin-nsdl.com/services/etds-etcs/etds-rpu.html
- In every quarter download latest e TDS/TCS RPU
- In e TDS/TCS return details of challan paid [ i.e. TDS amount, Interest, Fee, Other/penalty, BSR code, Challan serial No., Date of challan, Minor head] , details of deductee/collectee has to fill like section under which payment made, PAN, Name, Date of payment, Date deposit of TDS/TCS, amount paid, amount of TDS/TCS, Rate of TDS/TCS etc,.
Time limit for issuing TCS certificate
| For the Quarter ending | Form No 27D |
| June 30 | July 30 |
| September 30 | October 30 |
| December 31 | January 30 |
| March 31 | May 30 |
Some Important Notes:
- However, no collection of tax shall be made in the case of a resident buyer, if such buyer furnishes to the person responsible for collecting tax, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that goods referred in the above table are to be utilized for the purpose of manufacturing, processing or producing articles or things or for the purposes of generation of power and not for the purpose of trading.
- Section 206C (1D) provides that tax is to be collected at source@1% of sale consideration by the seller from the buyer, where the sale of jewellery or bullion is in cash and the sale consideration –
- For jewellery exceeds 5 lakhs,
- & for bullion exceeds Rs. 2 lakhs
In such cases, tax has to be collected at source by the seller from the buyer irrespective of the purpose of its use, whether for manufacturing or trading or for personal use.
The purpose of this requirement is to reduce the quantum of cash transaction in bullion and jewellery sector and also to curb the flow of unaccounted money in the trading system of bullion and jewellery.
A person collecting tax in accordance with the provisions of the section is vested with the responsibility of preparing such statements for such periods as may be prescribed after paying the tax collected to the credit of the Central Government within the prescribed time.
The statement should be delivered or caused to be delivered to the prescribed income-tax authority or the person authorized by such authority. The statement should be in the prescribed form and verified in the prescribed manner. The statement should set forth the prescribed particulars and should be filed within such time as may be prescribed.
CONSEQUANCE ON DEFAULT IN TDS / TCS PROVISIONS
| Failure to deduct and pay tax deducted at source under section 192 to 196C [Sec 201(1A)] |
|
| Failure to collect tax at source and paid.[ Sec 206C (7)] | Tax with interest @ 1% per month |
| Failure in furnish TDS/TCS return within stipulated time [U/S 234E] | Rs. 200 per day and shall not exceed the amount of tax deducted/collected. |
| Penalty for failure to furnish quarterly TDS/TCS return [271H] | Rs. 10000/- to Rs. 100000/ |
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