Guide to .. Tax Management ,Tax Planning and Tax Saving

Tax Collected at Source (TCS)




TCS is the Tax Collected at Source by the seller (collector) from the buyer/ lessee (collectee/ payee). The goods are as specified under section 206C of the Income Tax Act, 1961.

If the purchase value of goods is X, the amount payable by the buyer is X+Y, where Y is the value of tax at source. The seller deposits Y (tax collected at source) at any designated branch of banks authorised to receive the payment.

The seller, lessor or licensor, is responsible for the collection of tax from the buyer, lessee or licensee. The tax is collected for sale of goods, on transactions, receipt of amount from the buyer in cash or issue of cheque, draft or any other mode, whichever is earlier.

11.2.    Classification of Seller for TCS

Under TCS, a seller is defined as any of the following:

    • Central Government

    • State Government

    • Any Local Authority

    • Any Statutory Corporation or Authority

    • Any Company

    • Any Partnership Firm

    • Any Co-operative Society

    • Any individual/HUF whose total sales or gross receipts exceed the prescribed monetary limits as specified under section 44AB during the previous year

11.3.    Classification of Buyer for TCS

A buyer is classified as a person who obtains goods or the right to receive goods in any sale, auction, tender or any other mode. The following are not included:

    • Public Sector Companies

    • Central Government

    • State Government

    • Embassy of High Commission, Consulate and other Trade Representation of a Foreign State

    • Any Club, such as social clubs, sports clubs and the like

11.4.    Goods and Transactions classified under TCS

Goods and transactions classified under TCS are listed below:

    • Alcoholic liquor for human consumption including Indian Made Foreign Liquor (IMFL)

    • Tendu leaves

    • Timber obtained under a forest lease

    • Timber obtained by any mode other than under a forest lease

    • Any other forest produce not being Timber or Tendu

    • Scrap (Scrap means waste and scrap from the manufacture or mechanical working of materials which is usable as such because of breakage, cutting up, wear and tear and other reasons)

    • Licensing or leasing of Parking Lot, Toll Plaza

    • Mining and quarrying

11.5.    Certificate of TCS

The certificate of collection of tax at source has to be submitted in Form No-27D by persons collecting tax at source within a week from the last day of the month in which the tax was collected.

If there is more than one certificate to be issued to a buyer for tax collected at source with respect to the period ending September 30 and March 31 in the financial year, then the person collecting the tax on request from the buyer can issue a consolidated certificate within one month from the end of such period.

If an issued TCS certificate is lost, the person collecting tax at source may issue a duplicate certificate on plain paper, with necessary details as contained in Form-27D.

The Assessing Officer (AO), before giving credit for the tax collected at source on the basis of the duplicate certificate, has to get the payment certified and obtain an Indemnity Bond from the assessee.

11.6.    TCS Exemptions

TCS can be totally exempted or fixed at a lower rate under some circumstances.

Total Exemption: No TCS Collection

A declaration by the buyer in Form Number 27C (in duplicate) has to be made for total exemption. The declaration is if the goods listed are to be used for the purpose of manufacturing or processing and not trading. A copy of the declaration has to be given to the person collecting tax.

The person collecting this declaration form has to submit the copy to the authorities concerned on or before the seventh day of the following month.

Lower Rate of TCS

The buyer (Collectee) can apply to the Assessing Officer (AO) for a lower rate, using Form No.13,  subject to the condition that the AO is convinced that the total income of the buyer (Collectee) justifies the lower rate. The AO may issue a certificate, specifying the rate of collection.

11.7.    Payment of TCS to the Government

The tax collected is to be paid to the Central Government within one week of the last day of the month in which the tax was collected. This payment is made in any branch of Reserve Bank of India (RBI), State Bank of India (SBI), or any other authorised bank. The payment is made accompanied by income tax challan 281. If the tax is collected on behalf of the Government, then the amount can be paid without the income tax challan.

11.8.    Electronic TCS (e-TCS)

e-TCS is the filing of TCS returns using electronic media. It is mandatory for corporate and government collectors to furnish TCS returns in electronic form, from financial year 2004-2005. Collectors (other than government and corporates) may file TCS returns in electronic or physical form.

NSDL collects the e-TCS returns from the Collectors on behalf of the Income Tax Department.

TCS returns on computer media for e-TCS

TCS returns filed using computers should be in TCS specific form formats and must contain all the information, details and particulars specified in such forms.

Computer media specifications are as follows (any of these):

  • CD ROM of capacity 650 MB or more
  • 4mm 2GB/4GB (90M/120M) DAT Cartridge
  • 3.5 Inches, 1.44 MB floppy diskette.

The returns must be accompanied by Form No.27B and verified.

11.9.    Filing of TCS Returns

TCS returns are to be filed quarterly, in addition to annual returns.

  • The quarterly returns are to be filed in Form Number 27EQ on or before  July 15, October 15 and January 15, respectively for the first three quarters of the financial year. For the last quarter, the returns are to be filed on or before April 30.
  • Annual returns are to be filed in Form Number 27E on or before June 30 of the following financial year

11.10. Rate of TCS for different types Goods Specified under different categories :

Type of Goods Rate
Liquor of alcoholic nature, made for consumption by humans 1%
Timber wood under a forest leased 2.5%
Tendu leaves 5%
Timber wood by any other mode than forest leased 2.5%
A forest produce other than Tendu leaves and timber 2.5%
Scrap 1%
Minerals like lignite, coal and iron ore 1%
Bullion that exceeds over Rs. 2 lakhs/ Jewellery that exceeds over Rs. 5 lakhs 1%
Purchase of Motor vehicle exceeding Rs. 10 Lakhs 1%
Parking lot, Toll Plaza and Mining and Quarrying 2%
More Topics ...
Various Authorities
Power Of Income Tax Authorities Relating To Search And Seizure [ Section 132 ]
Application Of Seized Or Requisitioned Assets [Section132(B)]
Power Of Survey [ Section 133a ]
Provision Relating To Power To Collect Certain Information [Section 133b]
Disclosure Of Information Regarding Assessees To Certain Authorities [ Section 138 ]
Payment of Tax
Modes of recovery of Tax
Introduction- Deduction of Tax at Source (TDS)
Deduction of Tax from the “Salary” [ Sec-192]
Deduction Of Tax From Interest On Securities [ Section-193]
Deduction Of Tax From Deemed Dividend [ Section-194]
Deduction Of Tax From Interest Other Than Interest On Securities [ Section 194A]
Winning From Lottery Or Crossword Puzzle Or Card game And Game Of Any Sort [Section 194B]
Winning From Horse Race [ Section 194BB]
Payment To Contractor And Sub-Contractor [ Section 194C]
Tax Deducted At Source From Insurance Commission [ Section 194D]
Payments To Non-Resident Sportsmen Or Sports Associations [ Section 194E]
Commission, Etc., On The Sale Of Lottery Tickets [Section 194G]
Commission Or Brokerage [ Section 194H]
Payment Of Rent [ Section 194 I ]
Fees For Professional Or Technical Services [ Section 194J]
Time Limit For Filling Return Of Income [ Section 139(1)]
When Return Of Loss Should Be Filed [ Section 139(3)]
Can Return Be Filied Beyond Time [ Section 139(4)]
Can Revised Return Be Filed [ Section 139(5)]
What Is A Defective Or Incomplete Return [ Section 139(9)]
Who Should  Sign The Return Of Income [ Section 140]
Permanent Account Number (PAN)
Why Every Person Needs Tax Planning ?
How is Tool of Tax Planning Exercised ?
Methods Of Tax Planning
Tax Avoidance
Tax Evasion
The Difference Between ‘Tax Planning’ And ‘Tax Management’
The Difference Between ‘Tax Avoidance’ And ‘Tax Evasion’.
Procedure for imposing Penalty [ Sec. 274]
Various Types Of Penalties In The Event Of Default.
Salient Features Of FBT
Important Points Relating To Fringe Benefit Tax
Characteristics Of FBT
Classification Of Employer For FBT
Classification Of Not Employer For FBT
Direct Fringe Benefit
Deemed Fringe Benefit
Payment Of FBT To The Government
Filing Of FBT Return
Service Tax – Key Provisions At A Glance
Applicability Of Service Tax
Service Tax Rate
Registration Formalities
Payment & Refund Of Tax
Filling Or Returns
Central Value Added Tax (Cenvat) Credit
Penalties & Prosecutions
Concept of VAT
Types of Dealers
General terminology used in VAT
Advantages of VAT over Sales Tax
VAT Rates
Computation of VAT and Profit
Items Covered in Indian VAT
Inter-State Sale
What are the objectives of CST Act ?
What are the conditions for CST Act to become applicable.
Rate of CST
Sale Price
CST Transactions Forms
Classification of Seller for TCS
Classification of Buyer for TCS
Goods and Transactions classified under TCS.
Certificate of TCS
TCS Exemptions
Payment of TCS to the Government
Electronic TCS (e-TCS)
Filing of TCS Returns
For removing any Asset, Books of account, documents etc. found during search in contravention of order served under [Section 132 (3)]
Removal, Concealment, transfer or delivery of property to avoid tax recovery [Section 276]
Default on the part of Liquidator [Section 276 (A)]
Failure to comply with provisions regarding transfer of immoveable property [Section 276 AB].
Failure to pay the tax deducted at source [Section 276 W]
Failure to pay the tax collected at source [Section 276 (BB)]
Willful attempt to evade Tax, Penalty, Interest etc. [Section 276 C (1)]
Failure to furnish return of income (Section 276 CC)
Failure to furnish return of income in search cases u/s 158 BC (Section 276 CCC)
Failure to produce accounts and documents [Section 276 (D)].
False Statement in Verification [Section 277]
Falsification of books of account or document, etc. [Section 277A]
Abetment in False Return (Section 278)
Punishment of Second and Subsequent Offences (Section 278 A)
Punishment not to be imposed in certain cases (Section 278 AA)
Offences by Companies (Section 278 B)
Offences by Hindu Undivided Families. (Section 278 C)
Presumption as to Assets, Books of Account etc. in certain cases. (Section 278 D)
Prosecution to be at the instance of commissioner [Section 279]
Meaning of Settlement Commisions
Setting Up Of Settlement Commission
Constitution Of Settlement Commission [Section 245B]
Jurisdiction And Powers Of Settlement Commission [Section 245BA]
Vice-Chairman To Act As Chairman [Section 245 BB]
Transfer Of Cases [Section 245 BC]
Decision To Be Majority [Section 245 BD]
Application For Settlement Of Cases [Section 245 C]
Calculation Of Additional Income-Tax [Section 245C (1A)]
Bar On Making Application [Section 245C (1E)]
Procedure On Receipt Of Application [Section 245D]
Payment Of Additional Income-Tax [Section 245D (2A)]
Power Of Settlement Commission To Order Provisional Attachment To Protect Revenue [Section 245DD (1)]
Get.. Tally.ERP9 Book + GST Practical Assignment @ Rs.550 Tally.ERP9 Book Online Order Tally.ERP9 Book Content
© 2018 : IncomeTaxManagement.Com