TCS or Tax Collected at Source is the tax which is payable by the seller. But only after collecting or deducting the same from the buyer at the time or point of sale happening between them. This is governed by section 206C of the Income Tax Act, which states the goods on which the seller is required to collect TCS from the buyer.
Goods Covered under Provisions governing TCS along with Rates
The following table provides details with regard to the TCS to be collected for the sale of different goods as per section 206C.
| SL. NO. | COLLECTION CODE | GOODS SOLD | THRESHOLD AMOUNT | TCS RATE% INDIVIDUAL OR HUF |
TCS RATE% OTHERS |
| 1 | A | Alcoholic Liquor for human consumption | 1 | 1 | |
| 2 | B | Timber obtained under a forest lease | 2.5 | 2.5 | |
| 3 | C | Timber obtained by any other mode | 2.5 | 2.5 | |
| 4 | D | Any other forest produce that is not timber or tendu leaves. | 2.5 | 2.5 | |
| 5 | E | Scrap | 1 | 1 | |
| 6 | F | Grant of a license, lease, etc. of the Parking lot | 2 | 2 | |
| 7 | G | Grant of a license, lease, etc., of Toll Plaza | 2 | 2 | |
| 8 | H | Grant of Mining and quarrying | 2 | 2 | |
| 9 | I | Tendu Leaves | 5 | 5 | |
| 10 | J | Minerals, which would include coal or, lignite or iron ore (Applicable from F.Y. 2012-13 onwards) | 1 | 1 | |
| 11 | K | TCS on sale of Bullion (Applicable from F.Y. 2012-13 to 2016-17) | In Excess of Rs. 200000 | 1 | 1 |
| 12 | L | TCS on Motor Vehicle (Applicable from F.Y. 2016-17 onwards) | In Excess of Rs. 1000000 | 1 | 1 |
| 13 | M | TCS, which is on the sale in cash of any goods (and this shall be anything other than bullion/jewellery) (Applicable for F.Y. 2016-17) | In Excess of Rs. 200000 | 1 | 1 |
| 14 | N | TCS on providing any services (other than Ch-XVII-B) (Applicable for F.Y. 2016- 17) | In Excess of Rs. 200000 | 1 | 1 |
| 15 | O | TCS on remittance under LRS for purchase of overseas tour program package (Applicable from F.Y. 2020-21 onwards) | 5 | 5 | |
| 16 | P | TCS on remittance under LRS. This shall be for an educational loan taken from financial institutions mentioned in section 80E of the Income Tax Act (Applicable from F.Y. 2020-21 onwards) | 0.5 | 0.5 | |
| 17 | Q | TCS on remittance under LRS for purposes other than for the purchase of an overseas tour package or for an educational loan taken from a financial institution (Applicable from F.Y. 2020-21 onwards) | 5 | 5 | |
| 18 | R | TCS on sale of goods (Applicable from F.Y. 2020-21 onwards) | In Excess of Rs. 5000000 | 0.1 | 0.1 |
Seller under TCS
For the purpose of collection of TCS, there are certain people or organizations being classified as sellers and no other sellers can or are supposed to collect TCS from their buyers other than the following:
- Central government
- State government
- Local Authority
- Statutory Corporation or Authority
- Company registered under the Companies Act
- Partnership firm
- Co-operative Society
- Such another person or even a HUF is subjected to an audit of accounts as per the applicable provisions of the Income Tax Act for a relevant financial year.
Buyer under TCS
Buyer can be understood as the person who is obtaining goods of a specified nature through a sale or is holding the right to obtain the goods from the seller by ways majorly including the following:
- Auction
- tender or
- such other mode.
Exempted Buyers
The following buyers have been exempted from payment of TCS:
- Public Sector Companies
- Central Government
- State Government
- Embassy of High Commission
- Consulate along with the other trade representatives of foreign nation clubs, such as sports clubs and social clubs.
Non-Applicability of TCS
TCS shall not be collected in the following cases:
- When the eligible goods are used for the buyer’s personal consumption,
- The buyer is buying the goods for manufacturing, processing, or production and not for the purpose of trading those goods.
Important Points
- The buyer deducts TDS while the seller collects TCS.
- TAN Number is mandatory for the collection of TCS.
- The seller shall deposit the TCS he deducted and collected within 7 days from the last day of the month, during which tax was collected using challan 281.
- TCS return shall be filed on a quarterly basis using Form 27EQ.
- The non- or late filing of the TCS return shall result in a fee or penalty of INR 200 per day, which shall be levied for each day after the completion of the due date until the date on which the return is filed. However, such an amount shall be limited to the amount of TCS to be paid.
- Referring to the provisions of Section 201(1A) of the Income Tax Act 1961, if tax is not deducted at source, either partly or fully, then a penalty or an interest rate of 1% per month will be applicable from the date on which tax was supposed to be deducted to the date on which it is actually deducted.
- In case tax has been deducted, and has not been paid either partly or fully, an interest rate of 1.5% per month will be applicable from the date on which such tax was deducted by the payer to the date on which it was actually paid to the credit of the government.
