Tax Collected at Source TCS

Meaning:  Tax collected at source (TCS) is the tax payable by the seller which he collected from the buyer on sale.

Condition for Payment: 

1. It should be deposited with the tax authorities within the applicable due dates.

2. 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.

 3. It is to be noted that the seller (Mr. Krishna) is responsible only for collecting the tax and depositing it to the government. He is not responsible for paying the TCS money out of his pocket.

4. Section 206C of the Income Tax Act of 1961 has this provision.
 
who can collect the TCS:

1. Only Saller is responsible for collecting TCS.

 
See an Example: Mr. Sold goods worth Rs.100 to Mr. B on which TCS is applicable. A will collect the TCS amount (Say Rs.20) on collecting Rs.100 from Mr. B.

TCS Rates for Specific Goods: 
1. Liquor of alcoholic nature-1%
2. Timber wood obtained under a forest leased-2%
3. Tendu leaves-5%
4. Scrap-1%
5. Minerals being lignite, coal and iron ore--1%
6. Purchase of Motor vehicle exceeding Rs.10 lakh--1%,
7. Parking lot, Toll Plaza and Mining and Quarrying--2%


TCS Certificate:
1. Form 27EQ-TCS certificate to the purchaser of the goods.
2. Form 27D is the certificate issued for TCS returns filed.

Certificate contains the following details:
1. Name of the Seller and Buyer.
2. TAN of the seller i.e. who is filing the TCS return quarterly.
3.  PAN of both seller and buyer.
4. Total tax collected by the seller Date of collection.
5.  the rate of Tax applied

TCS Exemptions:
1. When the eligible goods are used for personal consumption.

2. The purchaser buys the goods for manufacturing, processing or production and not for the purpose of trading those goods and a declaration has been filed in this regard.

TCS Provision in Foreign Remittance Transactions:
1. Foreign remittance related to educational purposes does not attract TCS as per recent amendments made in the section. Up to Rs.10 Lakhs - No TCS needs to be collected. Greater than Rs.10 Lakhs - TCS to be collected at the rate of 5%. Foreign remittances related to sale of overseas tour package program: Up to Rs.10 Lakhs - 5% TCS needs to be collected. Greater than Rs.10 Lakhs - TCS to be collected at the rate of 20%