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Tax Collected at Source, Latest TCS Rates in India

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Tax Collected at Source, Latest TCS Rates in India, TCS means collection of tax at source by the seller (collector) from the buyer (collectee/payee) of the goods (specified u/s 206C of Income-tax Act, 1961, like timber obtained under forest lease, scrap, any other forest produce not being timber or tendu leaves etc.,). For e.g. if purchase value of goods is Rs.10,000/-, the buyer will pay an amount of Rs.10,000/- + X (X being the value of TCS as prescribed under Income-tax Act, 1961) to the seller. The seller will deposit the tax collected at source (TCS) at any of the designated branches of the authorised banks. Now you can scroll down below n check more details related to Tax Collected at Source, Latest TCS Rates in India

Tax Collected at Source

Tax Collected at Source CAknowledge

Just like TDS, Income Tax also includes TCS within its ambit. In this article, we will study about TDS versus TCS & all the aspects related to TCS.

Difference between TDS & TCS:

Tax Deducted at Source Tax Collected at Source
Generally,  tax  is  required  to be deducted at the time of credit  to the  account  of  the  payee  or  at the  time  of  payment, whichever is earlier. Generally, tax is required to be collected at the source at the time of debiting the   amount payable by the buyer of certain goods to the account of the buyer or at the time of receipt of such amount from the said buyer, whichever is earlier.

Rates of Tax Collected at Source :

Sr. No. Nature  of Goods Percentage
1. Alcoholic liquor for human  consumption 1%
2. Tendu Leaves 5%
3. Timber obtained under a forest  lease 2.5%
4. Timber obtained by any mode other than above 2.5%
5. Any Other Forest Products other than timber or Tendu leaves 2.5%
6. Scrap 1%
7. Minerals 1%

Some Important Notes:

  1. However, no collection of tax shall be made in the case of a resident buyer, if such buyer furnishes to the person responsible for collecting tax, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that goods referred in the above table are to be utilized for the purpose of manufacturing, processing or producing articles or things or for the purposes of generation of power and not for the purpose of trading.
  2. Section 206C (1D) provides that tax is to be collected at [email protected]% of sale consideration by the seller from the buyer, where the sale of jewellery or bullion is in cash and the sale consideration –
    1. For jewellery exceeds 5 lakhs,
    2. & for bullion exceeds Rs. 2 lakhs

In such cases, tax has to be collected at source by the seller from the buyer irrespective of the purpose of its use, whether for manufacturing or trading or for personal use.

The purpose of this requirement is to reduce the quantum of cash transaction in bullion and jewellery sector and also to curb the flow of unaccounted money in the trading system of bullion and jewellery.

A person collecting tax in accordance with the provisions of the section is vested with the responsibility of preparing such statements for such periods as may be prescribed after paying the tax collected to the credit of the Central Government within the prescribed time.

The statement should be delivered or caused to be delivered to the prescribed income-tax authority or the person authorized by such authority. The statement should be in the prescribed form and verified in the prescribed manner. The statement should set forth the prescribed particulars and should be filed within such time as may be  prescribed.

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About CA Ridhi Dhoot

The writer is a Chartered Accountant & a Licentiate Company Secretary. You can reach out to her at [email protected]

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