Webtel becomes an authorized e-invoicing solution provider in Saudi Arabia by ZATCA. Start your e-invoicing journey today! Click Here
PMS / CMS / ESS / HRMS - One Software for all HR processes! Click Here
Now Office Management is at all its power with Digital Signature! Click Here
Web-e-Sign - A Complete Digital Solution for Bulk Signing! Click Here
Tax Collected at Source (TCS) was proposed under the Income Tax Act to collect a prescribed rate of tax from the buyer on specified goods and deposit the same with the Government. In this blog, we will discuss what is TCS and what is the prescribed rate of TCS.
Tax Collected at Source is the amount collected by the seller of specified goods from the buyer at the time of sale, over and above the sale amount, and is remitted to the government account. TCS follows the principle of “COLLECT AS YOU EARN”.
Section 206 of the Income-Tax Act defines the list of goods on which TCS is applicable,
To understand the concept of TCS better, let us take an example of X Good that costs Rs.100. The tax collected on the source for X is Rs. 20 (Rs. 80 + Rs. 20) and the seller deposits this amount to a certain branch of a bank that is authorized to accept the payment. Here, the sellers are not liable to pay the amount of tax themselves and are only responsible to collect the tax from the customer at the point of sale.
TCS is collected by the seller of specified goods from the buyer in the given cases, whichever is earlier:
What is the Rate of TCS?
Here is the list of TCS Rates applicable on specified goods,
Alcoholic liquor for human consumption
Any other forest product not being timber or tendu leave
Foreign Remittance under LRS for education through Loan from FI
Foreign Remittance under LRS in other cases
Mining and Quarrying
Payment for Overseas Tour Package
Receipt on Sale of other goods above 50 lacs by business with a turnover above Rs. 10 Cr in last year
Sale of Motor vehicle of more than Rs. 10 lacs (even if no cash payment)
Sale of other goods for which cash received exceeds 2 lacs
Timber obtained under a forest lease
Timber obtained under any mode other than forest lease
Purchase of Coal, Lignite, or Iron Ore
Here is the list of classified sellers in TCS who must collect tax from the buyer,
The buyers classified to pay TCS are mentioned below,
Date of deposit
Date of filling TCS return
7th of every next month in which payment is made
Form 27EQ of TCS Return contains all the details of tax collected at source as per Section 206C of the Income Tax Act 1961. The Form 27EQ must be filed by the taxpayer in every quarter and shall be submitted to the government collectors and deductors.
TCS Certificate Form 27D has to be provided to the buyer of goods when the quarterly TCS Return is filed in Form 27EQ. The Certificate Form 27D contains the following details,
Form 27D TCS Certificate is to be issued within a period of 15 days from the date of filing the quarterly TCS Return in Form 27EQ.
As per Form 13, the buyer can apply to an Assessing Officer for a lower rate of Tax Collection at Source if the buyer’s gross income is justifiable for a lower rate. The Assessing Officer (AO) shall issue a certificate for a lower rate of TCS which will be applicable till it is not canceled by the AO.
TCS exemption can be applied through Form 27C by the buyers using the goods for the purpose of manufacturing, processing, or production of goods/article or thing. A duplicate of Form 27C shall be given by the buyer in the declaration to the seller and the seller shall deliver a copy of Form 27C to the Chief Commissioner/Commissioner of Income Tax.