TCS or Tax Paid at Source is a tax that the seller owes but that is collected by the buyer. The list of items that are listed for this reason is found in Section 206C of the Income Tax Act.
Tax Collected at Source is the complete form of TCS. The purchaser is responsible for paying the TCS bill, which is collected from the lessee or buyer. Section 206C of the Income Tax Act of 1961 specifies the products.
To better understand the mechanism, look at an example. If a box of chocolates costs Rs. 100, the customer will pay Rs. 20 in all, with the Rs. 20 representing the tax received at the source. The money is then sent to a specific branch of a bank that has been approved to accept the payments.
The purchaser is only responsible for collecting this tax from the buyer; he or she is not responsible for paying it. The tax is intended to be collected while selling merchandise, doing purchases, issuing a cash refund from a customer, or issuing a check or draught, whichever method is paid first. The Income Tax Act of 1961, Section 206C, makes this provision.
The sellers are known as TCs for the purpose of collecting tax at the source. TCS must be collected only by these vendors. The following is a list of those vendors:
Just a few types of buyers, including vendors, must pay tax at source to the seller:
You must note that: when TCS is not paid at due to the government, the seller will be charged 1% of the total amount that has not been paid on the due date as a penalty.
The items mentioned below can be used for two different purposes. The tax is determined by the reason for purchasing the products.
Each type of product has a separate rate of TCS tax collected at source:
|Type of Good||Rate of TCS|
|Liquor of alcoholic nature, made for consumption by humans||1.00%|
|Minerals like lignite, coal, and iron ore||1.00%|
|Bullion that exceeds over Rs. 2 lakhs/ Jewellery that exceeds over Rs. 5 lakhs||1.00%|
|Purchase of Motor vehicle exceeding Rs. 10 Lakhs||1.00%|
|Parking lot, Toll Plaza and Mining and Quarrying||2.00%|
|Timber wood under a forest leased||2.50%|
|Timber wood by any other mode than forest leased||2.50%|
|A forest produce other than Tendu leaves and timber||2.50%|
|Quarter||Period||Due Date of Filing|
|First Quarter||1st April to 30th June||March 31st|
|Second Quarter||1st July to 30th September||March 31st|
|Third Quarter||1st October to 31st December||Jan 15th|
|Fourth Quarter||1st January to 31st March||May 15th|
This certificate must be submitted in Form 27D within a week of the last day of the month in which the tax was paid, by individuals or organizations that collect the tax at source. When there are several certificates to be released for a buyer for TCS within the term that ends on September 30 and March 31 for a financial year, a combined certificate will be issued within a month of the last day of the year. The customer would have to order this certificate.
If a TCS certificate is misplaced, the agency in charge of tax collection at the source may issue a new certificate that can be written and attested on plain paper that includes all of the relevant information from Form 27D.
TCS at Lower Rate – With the aid of Form 13, a buyer will apply to an Assessing Officer for a lower rate of tax collection at the source, on the liable condition that the Assessing Officer is satisfied that the buyer’s gross income is justifiable for the lower rate. The Assessing Officer may also grant a certificate specifying the tax collection rate at source, with a lower rate added.
The buyer must announce his eligibility for absolute exemption from TCS on a Form 27C. The declaration must state and show that the commodities proclaimed are for production and producing rather than selling. A duplicate copy of the declaration form must be sent to the individual or agency collecting the fee, and the collector must apply the declaration form to the relevant authority within a week of the following day.
The method of filing TCS returns by electronic media is referred to as e-TCS. Government and corporate collectors are required to file TCS returns in electronic format beginning with the 2004-2005 fiscal year. Other collectors have the option of filing TCS returns in either paper or electronic format.
The NSDL is in charge of collecting the e-TCS returns from the Income Tax Department’s collectors. Several TCS-specific type formats should provide all of the details needed to file TCS returns.
Bullion valued over Rs. 2 lakhs and jewelry valued over Rs. 5 lakhs are subject to a tax of 1% of the total value.