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 SourceTax 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 GoodsRate of TCS
Alcoholic liquor for human consumption(Other than Indian made foreign liquor)1%
Indian made foreign liquor1%
Tendu Leaves5%
Timber obtained under a forest  lease2.5%
Timber obtained by any mode other than above2.5%
Any Other Forest Products other than timber or Tendu leaves2.5%
Scrap1%
Minerals, being coal or lignite or iron ore1%
Grant of lease/license of parking lot, toll plaza, mining quarrying other than mineral oil, petroleum and natural gas1%
Sale of motor vehicles value exceeding Rs. 10 lakhs1%

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 GovernmentTCS: 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 endingDue date of TCS Return
June 30July 15
September 30October 15
December 31January 15
March 31May 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 endingForm No 27D
June 30July 30
September 30October 30
December 31January 30
March 31May 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 [email protected]% of sale consideration by the seller from the buyer, where the sale of jewellery or bullion is in cash and the sale consideration –
    1. For jewellery exceeds 5 lakhs,
    2. & 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)]
  • Tax with interest shall be payable @ 1% from the date on which actually deductible and to the date on which actually deducted.
  • @ 1.5% from the date on which tax was actually deducted and to the date on which tax is actually paid.
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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