TCS  Is Mainly TAX Collected at Source

Tax Collected at Source, known as TCS, is a type of tax payable by the seller but collected by the buyer. Under the Income-tax Act, Section 206C has an exhaustive list of specified goods for this purpose.

What is Tax Collected at Source?

TCS is the Tax that is payable by the seller. In turn, the seller collects from the lessee or buyer. These goods are as specified under section 206C of the Income Tax Act, 1961.

For a proper understanding of the process, let’s take one example; If the amount of a chocolate box is 100 INR, the buyer ultimately pays 20 INR, where the 20 INR is the Tax collected at the source. The amount is then given to certain specified branches of banks who have been given the authorization to receive the payments. The seller is only responsible for collecting this Tax from the buyer and not paying it themselves. Tax is meant to be collected while selling goods, making transactions, issuing a receipt of a sum in cash from the buyer, or issuing a cheque or draft, whichever mode is paid by the earliest.

This provision is made under Section 206C of the Income Tax Act, 1961.

Rates of TCS in India:

Interest charges for paying late of the Tax Collected at Source to the Government for every delayed month are 1%.

Types of Goods	TAX %
Alcoholic nature liquor is made for consumption by humans.	1.00%
Timber wood, which is collected from a forest and have been leased.	2.50%
Leaves of Tendu	5.00%
Timber wood is not collected from a forest and has been leased but by any other mode.	2.50%
A forest product other than timber and leaves of tendu	2.00%
Scrap product	1.00%
Collection of money at Toll Plaza’s, Parking lot’s, Quarrying and even in Mining	2.00%
Lignite or coal, or iron ore which is included in Minerals	1.00%
Bullion that are exceeding over 2 lakhs INR/ Jewelry that exceeds over 5 lakhs INR.	1.00%

Classification of Seller for Tax Collected at Source:

The following are those people and organizations who are classified as sellers for Tax collected at source-

• Central Government (Government which is in Authority of handling the entire country).
• State Government (Government which is in Authority of running the whole state).
• Local Authority (Body who looks out towards the various parts of a city).
• Statutory Corporation or Authority.
• Company (Private or Public).
• Partnership Firms ( Company running under the direction of multiple owners who have made investments together).
• Co-operative Society (Housing).
• Any person/HUF has total sales/gross receipts that exceed the specified monetary restrictions as introduced under Section 44AB in the previous year.

Buyer’s classification for Tax Collected at Source:

A buyer is a person who is eligible to obtain goods or even the right of receiving the goods at a sale, tender, auction or any other mode. The following are those people and organizations who are exempted from the classification as buyers for Tax collected at source-

• Public Sector Companies.
• Central Government (Government which is in Authority of handling the entire country).
• State Government (Government which is in Authority of running the whole state).
• Highly Commissioned Embassies.
• Other Trade Representation and Consulate of a Foreign Nation.
• Several clubs include sports clubs and various social clubs.

Goods and Transactions which are classified under TCS:

The following are considered as those factors which are eligible for collecting Tax at source aka TCS-

• Alcoholic nature liquor is made for consumption by humans.
• Timber wood, which is compiled from a forest and has been leased.
• Leaves of Tendu.
• Timber wood is not collected from a forest and has been contracted but by any other mode.
• A forest product is different than timber and leaves of tendu.
• Scrap product.
• Collection of money at Toll Plaza’s, Parking lots, quarrying and even in Mining.
• Minerals include lignite or coal, or iron ore.
• Bullion that are exceeding over 2 lakhs INR/ jewellery that exceeds over 5 lakhs INR.

TCS Due Dates of FY 2020-21:

Quarter	Period	Due date of filing
1st Quarter	April 1 to June 30	March 31 2021
2nd Quarter	July 1 to September 30	March 31 2021
3rd Quarter	October 1 to December 31	January 15 2021
4th Quarter	January 1 to March 31	15th March 2021

Certificate of Tax Collected at Source:

Certificate of Tax collected at source is needed to be submitted in Form 27D within a week from the last date of the month in which that Tax had been ordered by people or entities who are recollecting the Tax at source aka TCS.

For a financial year, in the period that ends on September 30 and March 31, more than one certificate can be issued for a buyer for TCS; within a month from the last day of the selected period, a consolidated certificate can also be published. This certificate mainly has to be requested from buyer.

If a TCS certificate is lost, the entity in charge of collecting Tax at the source can re-issue a duplicate certificate that can also be printed and attested on plain paper, along with all required details as it is mentioned in Form 27D.

CIRCULAR NO 17 OF 2020 Guidelines for section 194-O (4) and section 206C (1-1) of the Income Tax Act 1961

DOWNLOAD FORM 27D

Exemptions of Tax Collected at Source:

There are 2 types of exemptions that are included in lower-rated TCS and the total exemption for Tax collected at source-

TCS at Lower Rate: The buyer has the provision for applying to the Assessing Officer, who is also identified as AO, for the collection of the Tax at source at a lower rate, with the support of Form 13, under the liable condition that the Assessing Officer has been convinced that the buyer’s total income can be justifiable for the lower rate. The Assessing Officer may also issue a certificate with the speed of tax collection at the source specified with the lower rate applied. They give certificate once the return is filled before the due date.

Total Tax Exemption-

The buyer have to make a declaration in the Form 27C that he is eligible for complete exemption from paying TCS. The declaration must specify and prove that the goods that have been announced are intended for processing and manufacturing and not trading. The person or entity collecting the Tax must also be given a duplicate copy of the declaration form. The collector have to submit the declaration form to the appropriate authorities within a week of the following day.

Electronic TCS (e-TCS):

When filing TCS returns through electronic media, the process of filing is referred to as e-TCS. Government and corporate collectors must file TCS returns in its electronic form, form and following the 2004-2005 financial year. Other collector No.27B, at exceeds over 2 lakhs INR and Jewellery that exceeds over 5 lakhs INR is collected at 1% of the amount being considered.