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TCS - Process, Procedure, Document Required, Fees, Eligibility, Duration

Tax Collected at Source (TCS) is an additional sum collected as tax from the buyer at the moment of sale by a seller of designated products. The TCS so collected is deposited by the seller to the government account. According to the Income Tax Act of 1961, certain sellers are required to collect a set proportion of tax when they receive payment from their buyers. The items on which the seller can collect tax from the buyers are governed by Section 206C of the Income-tax Act.

TCS is collected from goods that are of commercial or trading nature. Aside from the sale of commodities, anyone who enters into a lease, license, or contract for a parking lot, toll plaza, mining, or quarrying will receive a 2% commission from TCS.

Who can collect TCS?

Only specific individuals or organizations have been designated as sellers for Tax Collected at Source. No other vendor is permitted to collect tax from buyers at the point of sale. The following can collect TCS:

  • State government
  • Central government
  • Local authority
  • Statutory Corporation or Authority
  • Company 
  • Partnership firms
  • Cooperative Society
  • HUF

Goods on which TCS can be collected

A seller can collect TCS on the following goods:

  • Alcoholic beverage for consumption
  • Timber that has been leased
  • Tendu leaves
  • Forest product apart from tendu leaves and timber
  • Scrap
  • Parking Lot Ticket, Toll Plaza, Quarrying, and Mining
  • Minerals (lignite, coal, iron ore)
  • Jewelry worth more than Rs. 5 lakhs

TCS exemption

The following items are exempted from TCS:

  • Goods or products that are used for consumption at a personal level.
  • Goods that are purchased for manufacturing, production, or processing rather than trading.

TCS Return

Every tax collector is required to submit a quarterly TCS return for the tax collected during that quarter. TCS returns filed beyond the due date are subject to a Late Filing Fee of Rs.200/- per day for the time of delay from the due date.

TCS certificate

When a tax collector files his quarterly TCS return, he must furnish the buyers of the goods with a TCS certificate. The certificate should be issued within 15 days after the filing of the TCS quarterly returns. This certificate includes the following information:

  • Seller and Buyer's Names
  • TAN of the seller
  • The PAN of both the seller and the buyer
  • The total amount of tax collected by the seller
  • Collection date
  • The tax rate that was used

Credence Corporate Solutions will gladly help you if you need help in filing TCS. Please call our office and we will be pleased to assist you.

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TCS Frequently Asked Questions

The below-mentioned buyers are exempted from Tax Collected at Source: • Central Government • Public sector companies • State Government • Embassy of High commission • Sports and social clubs
• All payments collected by a government office should be deposited on the same day they are collected. • The TCS payment should be deposited by the seller within 7 days of the final day of the month in which the tax was collected. • If the tax collector, who collects the tax and deposits it with the government, fails to collect the tax or fails to pay it to the government by the above-mentioned due dates, he will be obliged to pay interest at the rate of one percent per month or part of a month. • Aside from the sale of commodities, anyone who engages in a lease, license, or contract for a parking lot, toll plaza, mining, or quarrying shall be charged a 2?eby TCS. • Within one week of the last day of the month in which the tax was collected, the seller must deposit the TCS amount in Challan 281. This payment can be made at any RBI, SBI, or other authorized bank branches. • The individual collecting tax must get a Tax Collection Account Number (TAN) and include it on all challans, certificates, returns, and other transaction-related papers. The buyer must provide the seller with his Permanent Account Number (PAN).

TCS Important Due Dates

Ask Questions about TCS

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