TCS: Tax Collected at Source

What is TCS?

TCS is an abbreviation for Tax Collection at Source. The provision of TCS is governed by section 206C. TCS is one of the Models of collecting Income-tax from the taxpayer, where the seller will collect tax from the buyer and will pay the same to the government.

TCS Rate 

SectionParticularsTCS Rates (in %) (AY 2020-21)TCS Rates (in %) (AY 2021-22)
206C(1)Sale of the following:
a) Alcoholic Liquor for Human Consumption1%1%
b) Tendu leaves5%5%
c) Timber obtained under a forest lease2.5%2.5%
d) Timber obtained by any mode other than under a forest lease2.5%2.5%
e) Forest produce(any other) not being timber or tendu leaves2.5%2.5%
f) Scrap1%1%
g) Minerals, being coal or lignite or iron ore1%1%
206C(1C)Grant of lease or license of the following:
a) Parking lot2%2%
b) Toll Plaza2%2%
c) Mining and quarrying (Other than mining and quarrying of mineral oil, petroleum and natural gas)2%2%
206C(1F)motor vehicle Sale of the value exceeding Rs. 10 lakh whether payment is received by cheque or by any other mode1%1%
206C(1G)(a)TCS on foreign remittance through Liberalised Remittance Scheme (LRS)NA5%(10% for non-PAN or Aadhar cases)
206C(1G)(b)TCS on the selling of overseas tour packageNA5%(10% for non-PAN or Aadhar cases)
206C(1H)TCS on sale of any goods [except goods covered under sec. 206C (1), 206C (1F) and 206C (1G)]NA0.1%(1% for non-PAN or Aadhar cases)

Notes:

Classification of Seller for TCS

For TCS purpose a seller is defined as any of the following person and organizations:

  • Central Government
  • State Government
  • Local Authority
  • Statutory Corporation or Authority
  • Company
  • Partnership Firms
  • Co-operative Society

Classification of Buyer for TCS

TCS shall not be collected by the seller if the Buyer is

  • Public Sector Entities or Companies
  • Central Government
  • State Government
  • Embassy of High Commission
  • Clubs include sports clubs and social clubs

Goods and Transactions Classified under TCS

The following are considered for collecting tax at source:

  • Liquor for human consumption including IMFL
  • Timber wood obtained from a forest 
  • Tendu Leaves
  • Timber wood 
  • Scrap
  • Bullion that exceeds over Rs. 2 lakhs/ Jewellery that exceeds over Rs. 5 lakhs

TCS Exemptions

There are two types of exemptions that include total exemption from collecting tax at source and lower-rated TCS.

Steps involved in TCS Compliance

  • Collection at source 206(C)
  • Submit TCS return within the time
  • Deposit tax collected at source to govt.
  • Then download TCS certificate form FROM TRACES

How to Make TCS Payment?

  • TCS should be deposit in Challan 
  • Deposit through internet banking.
  • Fill accurate TAN in challan
  • Minor Head of Challan
    • 200: TCS payable by the taxpayer
    • 400: TCS Regular assessment raised by Income Tax Department.
  • separately Amount shown -TCS, Interest, Late filing fee, penalty, etc., 

Due Date of TCS Return 

QuarterPeriodDue Date
1st 1st April to 30th June15th July 2020
2nd 1st July to 30th September15th Oct 2020
3rd 1st October to 31st December15th Jan 2021
4th 1st January to 31st March15th May 2021

CONSEQUENCE ON DEFAULT IN TCS PROVISIONS

Failure to collect tax at source and paid. [Sec 206C (7)]Tax with interest @ 1% per month
Failure in furnish 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 TCS return [271H]Rs. 10000/- to Rs. 100000/-

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