What is Tax Collected At Source (TCS)?

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Hiral Vakil

TCS
TDS
TDS Due Date

Tax Collected at Source (TCS) is an income tax, collected by the seller of specified goods, from the buyer. TCS is a concept where a person selling specific items is liable to collect tax from a buyer at a prescribed rate and deposit the same with the Government.

Let’s take an example to understand the concept of TCS:

Ram purchases jewellery from Yash of Rs. 7,00,000. Here, as per the provisions of TCS Ram would be liable to pay Rs. 7,07,000 to Yash ( Rs. 7,00,000 for jewellery and Rs. 7,000 as TCS at the rate of 1%).

Who should file TCS Return?
The seller of specific goods needs to file TCS Return.
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Who should file TCS Return?
The seller of specific goods needs to file TCS Return.
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Who needs to collect TCS (Tax Collected at Source)?

Every seller of specified goods shall collect TCS from the buyer of the goods. TCS will be collected:

  1. At the time of debiting the amount payable by the buyer or
  2. At the time of receipt of such amount from buyer, whichever is earlier.

Below is the list of specific goods on which TCS is applicable:

Tax credit in Form 26AS would be available to the buyer. The buyer can claim this TCS at the time of filing ITR. The tax credit is only available once the seller deposits the tax to the IT Department and files the TCS Return.

Due Dates for Tax Collected at Source
The seller needs to deposit collected TCS within prescribed due dates via challan no. 281.
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Due Dates for Tax Collected at Source
The seller needs to deposit collected TCS within prescribed due dates via challan no. 281.
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Who is the seller under Tax Collected at Source (TCS)?

Below is the list of sellers under TCS:

  1. The Central and State Government
  2. Local authority
  3. Statutory corporation or Authority
  4. Company
  5. Partnership Firm
  6. Co-operative society
  7. Individual or Hindu undivided family(HUF) if covered under section 44AB (mandatory Audit)

The seller/collector of TCS is responsible to file TCS Return/ Statement. The seller needs to file Form 27EQ within prescribed due dates.

What is Form 27EQ?
Every seller who collects TCS needs to file TCS Return quarterly.
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What is Form 27EQ?
Every seller who collects TCS needs to file TCS Return quarterly.
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Who is the buyer under Tax Collected at Source (TCS)?

According to the act, the Buyer means a person who obtains in any sale, by way of auction, tender or any other mode, the specified goods or right to receive any such goods. But it does not include:

  1. Public sector company,
  2. Central/State Government
  3. Embassy, a High Commission, legation, consulate and the trade representation of a foreign state
  4. A Club
  5. A buyer in the retail sale of such goods purchased for personal consumption.

What is Lower Rate TCS?

The buyer of a specified product can apply to his Assessing Officer (AO) for collecting tax at a lower rate, by making an application in Form 13. AO will issue a lower rate certificate. The certificate is valid until the time it is not canceled by the AO.

Tax Collected at Source Rates
Check out applicable TCS Rate before collecting it.
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Tax Collected at Source Rates
Check out applicable TCS Rate before collecting it.
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Who is exempt from TCS?

FAQs

1. What is TCS certificate?

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

2. How to retrieve lost TCS Certificate??

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 No. 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.

3. How to file TCS Return?

The seller/Collector is required to file a quarterly return in form 27EQ on or before the due date. The seller can file TCS return in following two ways:
1. Using Return Preparation Utility (RPU) provided by TIN NSDL,
2. Using online platforms like Quicko.

4. IS TCS applicable in case of purchase of Jewellery?

In case of purchase of jewellery, tax is collected by seller if the purchase amount exceeds Rs. 5 lakhs Or when any amount is paid in cash to the jeweller.

5. Is TCS applicable on purchase of second hand car?

TCS is applicable on the purchase of a second-hand car if its values is above Rs. 10,00,000. TCS is applicable @ 1% on total value.

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