Bytes - Your weekly dose of
investments, taxes, finance & more.
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%).
Every seller of specified goods shall collect TCS from the buyer of the goods. TCS will be collected:
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.
Below is the list of sellers under TCS:
The seller/collector of TCS is responsible to file TCS Return/ Statement. The seller needs to file Form 27EQ within prescribed due dates.
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:
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.
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.
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.
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.
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.
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.