Tax Collected at Source

TCS Rates in India

Here is a list of the Goods that are covered under TCS provisions and the rates that are applicable to them:  

Taxes are applicable when the below-mentioned goods are used for trading purposes. And if they are not utilized for processing, manufacturing, or producing things, then these taxes are not payable. The seller collects the tax due at the point of sale.

The Tax Collected at Source is different for goods as listed under different categories.

Here is an illustration to help you understand the concept of TCS. For instance: Mr. X purchases Scrap worth Rs. 2000 from Mr. Y. In this case, Mr. X will pay Rs. 2020 to Mr. Y (2000 for Scrap and 1% of Rs. 2000 i.e. Rs. 20 as TCS). Mr. Y would need to deposit the TCS collected with the Government.

Classification of Buyers and Sellers for TCS

The sellers pertaining to the organizations and people that are eligible to collect tax at source are listed below:

• State Government
• Central Government
• Local Authority
• Partnership firms
• Companies registered under the Companies Act
• Statutory Corporation or Authority
• Co-operative Society
• Any HUF or person who is eligible for an audit of his accounts under the Income-tax act during a fiscal year.

Similarly, there are specific buyers who are liable to pay the TCS to the sellers.

Here is a list of the buyers:

• State Government
• Embassy of High Commission
• Public sector companies
• Central Government
• Trade Representation of a Foreign Nation
• Consulates
• Sports clubs/social clubs

TCS Payments & Returns

The table below mentions the dates for Payment of TCS to the government:

*All the amount that the Government Office Collects has to be deposited on the same day.

TCS Return Filing

There are specific guidelines pertaining to the submission of TCS.

• At the end of the month in which the tax was collected the seller deposits the Tax Collected at Source in Challan 281. This has to be done within 7 days from the last of the tax collection month.
• In case the tax collector fails to deposit the tax collected to the government as per the above-mentioned due dates, he shall be liable to pay 1% interest for the complete month or a part of the month.
• The tax collector is required to submit TCS return in the Form 27EQfor the tax collected in a particular quarter.
• Once the TCS return is filed Form 27D ( certificate) is issued
• In case of delay in TCS payment, the depositor needs to pay the interest to the government before the filing of the Income-tax return.

What is TCS Certificate?

When the tax collector files quarterly TCS return, he also needs to handover a TCS certificate to the buyer of the goods. And Form 27D is the certificate that is issued upon the filing of the TCS returns. The following information is mentioned in this certificate:

• Buyer and Seller’s Name
• Permanent Account Number(PAN) of both the buyer and the seller
• Seller’s Tax Deduction and Collection Account (TAN) i.e. seller who has filed the TCS return quarterly
• Date of Collection
• Total Tax Collected by the Seller
• Applicable Tax Rate

This certificate is issued within 15 days of filing quarterly returns of the Tax Collected at Source. And the table below mentions the due dates:

Exemptions under Tax Collected at Source (TCS)

Tax Collected at Source is exempted under the following circumstances:

• When the purchase of the goods is for personal use.
• If the goods are purchased for processing, manufacturing, or production instead of trading purpose.

Tax Collected at Source under GST

• For online transactions, the traders or dealer selling goods online would be paid by the online platform after subtracting the tax @ 1 % under IGST Act. 0.5% in SGST and 0.5% in CGST).
• It is mandatory for all the traders/ dealers to be registered under GST.
• The taxable amount needs to be credited to the government maximum by 10th of the subsequent month.

Note: These provisions are w.e.f.  Oct 1^st, 2018

For instance: Mr. X (seller) is a trader who sells kitchenware on an online platform (buyer).  He gets an order worth Rs. 5, 000 (including the tax and commission). In this case, the online platform would deduct tax worth Rs. 50 (1% of Rs. 5000).