Tax Collected At Source

Tax collected at source (TCS) is the tax collected by the seller from the buyer on sale and deposited with the tax authorities. Section 206C of the Income-tax act governs the goods on which the seller has to collect tax from the buyers. Such persons must have the Tax Collection Account Number (TAN) to be able to collect TCS.

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The tax payable is collected by the seller at the point of sale. The rate of TCS is different for goods specified under different categories

Type of Goods or transactionsRate
Liquor of alcoholic nature, made for consumption by humans1%
Timber wood under a forest leased2.5%
Tendu leaves5%
Timber wood by any other mode than forest leased2.5%
Forest produces other than Tendu leaves and timber2.5%
Minerals like lignite, coal and iron ore1%
Purchase of Motor vehicle exceeding Rs.10 Lakhs1%
Parking lot, Toll Plaza and Mining and Quarrying2%
Where total turnover of seller is more than Rs.10 crores in the previous financial year and receives sale consideration of any products of more than Rs. 50 lakhs, such seller must collect TCS upon receiving consideration from the buyer on such amount over and above Rs.50 lakhs, as per Section 206C(IH).
(Without PAN, then 1% is TCS)

TCS is not liable to be collected in case of goods purchased for personal consumption except in case of motor vehicles.

Person liable to collect TCS

The following persons are liable to collect TCS from the buyer on sale:

  • Central Government
  • State Government
  • Local Authority
  • Statutory Corporation or Authority
  • Company registered under the Companies Act
  • Partnership firms
  • Co-operative Society
  • Any person or HUF who is subjected to an audit of accounts under the Income-tax Act for a particular financial year.

TCS compliance

  • Deposit the tax collected within 7 days from the last day of the month in which the tax was collected.
  • Submit a quarterly TCS return (Form 27EQ) in respect of the tax collected by him in a particular quarter. Due date for the return is 15th of the following month on quarter end.
  • On delayed payment/ delayed collection of tax interest @ 1% per month or a part of the month shall be levied.
  • TCS certificate (Form 27D) has to be provided to the buyer within 15 days from the due date of filing the quarterly return.