TCS on Profit and Gains from the Business of Trading in Alcoholic Liquor, Forest Produce, Scrap, etc. [Section 206C]
Every person, being a seller shall, at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt of such amount from the said buyer, whichever is earlier, collect from the buyer as income tax, the sum specified in the following table on the goods mentioned therein:
Nature of Goods
Percentage Rate of Tax Collection at Source
Category A (sale of the following) —
A-1. Alcoholic Liquor for Human Consumption (other than Indian Made
A-2. Indian made Foreign Liquor
A-3. Tendu Leaves
A-4. Timber obtained under a Forest Lease
A-5. . Timber obtained by any mode other than under a Forest Lease
A-6. Any other Forest Product not being Timber or Tendu Leaves
A-8. Minerals, being Coal or Lignite or Iron Ore
No Surcharges, Education Cess or SHEC shall be added to the above Rates. Hence , Tax will be Collected at Source (TCS) at the Basic Rate.
Note : (In some cases, these Rates are subject to Surcharge and Health and Education Cess)
If the purchaser or the licensee is a foreign company and the amount subject to tax collection (TCS) is more than Rs. 1 crore, but not more than Rs. 10 crore, surcharge is 2% of TCS during 2018-19
( it is 5% of TCS if such amount is more than Rs. 10 crore).
If purchaser/licensee is non-resident firm/co-operative society, surcharge @ 12% is applicable only if amount subject to TCS is more than Rs. 1 crore.
If purchaser / licensee is Non-Resident individual / HUF / AOP / BOI, surcharge at the rate of 15% is applicable if amount subject to TCS is more than Rs. 1 crore
( Surcharge is 10% if purchaser / licensee is non-resident individual / HUF / AOP / BOI and the amount subject to TCS is more than Rs. 50 lakh but not more than Rs. 1 crore).
If purchaser or licensee is a Non-Resident or a Foreign Company, Health and Education Cess of 4% (of TCS+SC) is applicable.
In no other case, Surcharge and Health and Education Cess shall be added.
Tax shall be collected under section 206C at the rates given in the table (above). If PAN of collectee is not intimated to the collector, tax will be collected by virtue of section 206CC either at twice the rate specified in the table (above) or at the rate of 5%, whichever is higher.
However, the provisions of section 206CC shall not apply in the case of a Non-Resident Collectee who does not have any Permanent Establishment in India.
Self Declaration by Buyer if relevant goods are Purchased for Manufacturing or Producing any Articles or Things [Section 206C(1A) & rule 37C]
Notwithstanding anything contained in section 206C(1), no collection of tax shall be made in the case of a buyer, who is resident in India, if such buyer furnishes to the person responsible for collecting tax, a declaration in writing in duplicate in the prescribed form (Form No. 27C) and verified in the prescribed manner to the effect that the goods referred to in column (2) of the aforesaid Table are to be utilised for the purposes of manufacturing, processing or producing articles or things or for the purpose of generation of power and not for trading purposes.
A builder is not competent to furnish Form No. 27 as he does not buy timber for the purpose of manufacturing, processing and producing article or things.
Similarly, a buyer who is a trader is not authorized to furnish Form No. 27C.
Declaration Furnished under Section 206C(1A) to be delivered to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner [Section 206C(1B)]
The person responsible for collecting tax under this section shall deliver or cause to be delivered to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner one copy of the declaration referred to in section 206C(1A) on or before the seventh day of the month next following the month in which the declaration is furnished to him.
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