Introduction:

The Indian IT Act has measures for the collection of tax at the point of origin. Certain individuals are obligated by these regulations to collect a specific proportion of taxes from their customers on unusual transactions. The majority of such transactions are of a commercial or trade character. It has no effect on an average person.

What goods are included under provisions of TCS?

The items on which the vendor is required to receive tax from customers are governed by Income Tax Act Section 206C.

Taxes are not due when the products listed below are used for manufacturing, processing, or creating anything. If the same products are used for trade purposes, tax is due. The vendor collects the applicable tax at the moment of sale. The TCS rate varies according to the category of goods:

Good Type

Rate of Tax Collected at Source

Liquor of an alcoholic character intended for human consumption

1%

Timber wood from a leased forest

2.50%

Tendu leaves

5%

Any forest produce apart from Timber and Tendu leaves

2.50%

Timber woods produced by any means other than leased forest

2.50%

Scrap

1%

Minerals

1%

Bullion worth more than 2,00,000 INR or Jewelry worth more than 5,00,000 INR

1%

Acquisition of a motor vehicle for more than Rs. 10 lakhs

1%

Mining and Quarrying, as well as a parking lot and a toll plaza

2%

What are the classification of sellers in Tax Collected at Source?

Some individuals or organisations have been designated as sellers for TCS. Aside from the sellers listed here, no other supplier of products can collect TCS from purchasers.

  1. The Central Government
  2. Government of the State
  3. Local Authorities
  4. Authority or Statutory Corporation
  5. A company incorporated under the Indian Companies Act
  6. Companies that form partnerships
  7. The Cooperative Society
  8. Any individual or Hindu Undivided Family who is subject to audit under the Indian Income-tax Act for a specific fiscal year.

What is the classification of buyers in Tax Collected at Source?

A buyer is an entity that receives goods of a certain sort by purchasing or right to acquire such items, whether through tender, auction, or any other method. However, the buyers listed below are free from paying tax at the point of sale.

  1. Companies in the public sector
  2. The Central Government
  3. Government of the State
  4. High Commission’s Embassy
  5. Consulates and other forms of foreign trade representation
  6. Sports and social clubs are examples of clubs.

Tax Collected at Source Returns and Payments

  • All payments collected by a government office must be submitted on the exact day they are collected.
  • Within a week of the final day of the month of TCS collection, the seller needs to deposit the TCS value in Challan 281.
  • If the TCS collector in charge of depositing the tax with the government fails to collect the amount or fails to pay the same to the government by the deadline, he or she will be responsible to pay interest at the rate of 1% each month.
  • Each tax collector is required to file a quarterly Tax Collected at Source return, in Form 27EQ. The interest on the late TCS payment should be settled before the return is filed.

What is a TCS Certificate?

When a TCS collector submits his quarterly return in Form 27EQ, he must present the buyer of the goods with a TCS certificate. The document provided for filing TCS returns is Form 27D. This document includes the following information:

  1. Seller and Buyer’s Names
  2. Seller’s TAN, i.e. the person who files the TCS returns on a quarterly basis
  3. PAN of both the vendor and the customer
  4. The total amount of Tax Collected at Source collected by the vendor
  5. Collection date
  6. The tax rate that was applied

This document must be granted within 15 days after the submission of TCS quarterly returns. The deadlines are as follows:

Quarter Ending Date

Deadline of Form 27D

30th June

30th July

30th September

30th October

31st December

30th January

31st March

30th May

Tax Collected at Source under Good and Service Tax

  • Under the IGST Act, every dealer or trader selling products online will get money from the digital platform after subtracting a 1% tax. (0.5% Central GST and 0.5%State GST)
  • The TCS needs to be paid to the authorities by the 10th of the following month.
  • All dealers and traders are obliged to register for GST on a mandatory basis.

What are the exemptions under TCS?

TCS is excluded in the following circumstances:

  • When the qualified commodities are consumed for personal purposes.
  • The customer purchases the items for manufacturing, processing, or producing rather than trading those commodities.

What are the rules regarding Form 24G submission?

  • Rules governing the deposit of TDS without the use of a Challan:
    • If TDS was deposited to the government without challan, the individual to whom TDS was reported for deposit must send a declaration by Form 24G document to the organization authorised by the Income Tax Principal Director.
    • Such declaration by Form 24G needs to be filed within 15 days after the conclusion of the applicable month. The paperwork for the period of March must be filed by 30th April.
    • Form 24G needs to be filed either:
      1. Digitally under digital sign
      2. Electronically, together with Form 27A verification or
      3. Confirmed using a defined electronic procedure.
    • The individual to whom TDS was reported for deposit must provide the Book Id number issued to each deductor for whom the amount deducted is deposited.
    • The method for submitting and verifying statement Form 24G should be specified by the Income Tax Department’s Principal Director-General.
  • Rules governing the deposit of TDS without the use of a Challan under Section 206C:
    • If TCS was deposited to the government without challan, the individual to whom the collector reported the TCS would file Form 24G document to the organization authorised by Income Tax Principal Director.
    • Form 24G needs to be filed within 15 days after the end of the applicable month. If Form 24G is for March, it should be filed on or before April 30th.
    • Form 24G needs to be filed either:
      1. Digitally under digital sign
      2. Electronically, together with Form 27A verification or
      3. Confirmed using a defined electronic procedure.
    • The individual to whom the collector reported the TCS must provide the Book Id number created to each deductor for whom the amount deducted is deposited.
    • The method for submitting and verifying statement Form 24G should be specified by Income Tax Principal Director-General.
  • Conclusion

    The TCS is the tax that the supplier collects from the customer when the purchaser purchases a specified category of products or services. This TCS rate is determined by the type of the products, and the seller must deposit the tax received from the customer with the government. This article provides everything you need to know about Tax Collected at Source.


FAQ’s

If an individual fails to submit their TCS return on time, a penalty of 200 INR per day needs to be paid for the duration of the delay. The sum of late charges, however, should not exceed the sum of TCS. Before submitting the TCS return, the late filing costs must be deposited.


If any tax collector submits an improper TCS return, a fine under Section 271H may be imposed. In other terms, if the TCS collector submits an improper TCS return, a minimum fine of 10,000 INR and a maximum fine of up to 1,00,000 INR may be imposed.


Yes, Form 26AS shows the information of TCS collected by the seller of specific commodities when such products were supplied to you.