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What is TCS?

As per the Income Tax Act, 1961, certain individuals/businesses have to collect a specified percentage of tax from their buyers on certain transactions. Such tax is known as the Tax Collected at Source or TCS. Section 206C of the Income Tax Act, 1961 deals with the goods on which tax is to be collected at source.

Which sellers are required to Collect Tax at Source?

The following sellers are required to collect TCS:

1. Central Government
2. State Government
3. Local Authority
4. Statutory Corporation or Authority
5. Company registered under the Companies Act
6. Partnership firms
7. Co-operative Society
8. Any person or HUF who is subjected to an audit of accounts under the Income tax act for a particular financial year.

Which buyers are required to Pay Tax at Source?

The following buyers are required to pay TCS:

1. Public sector companies
2. Central Government
3. State Government
4. Embassy of High Commission
5. Consulate and other Trade Representation of a Foreign Nation
6. Clubs such as sports clubs and social clubs

TCS Rate chart: What are the applicable TCS rates for FY 2019-20 and 2020-21

TCS Rate Chart for FY 2019-20 and 2020-21:

A. CATEGORY - 1: SECTION 206C (1)

Every person, being a seller, shall at the time of debiting 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 of any goods of the nature specified in column (1) of the Table below, a sum equal to the percentage, specified in the corresponding entry in column (2) of the said Table, of such amount as income-tax:

NATURE OF GOODS - SECTION 206C(1)

RATE (Up to 13th May 2020)

Rate (From 14th May 2020 to 31st March 2021)

Alcoholic liquor for human consumption

1%

1%

Tendu Leaves

5%

3.75%

Timber obtained under a forest lease

2.5%

1.875%

Timber obtained by any mode other than a forest lease

2.5%

1.875%

Any other forest produce (not being timber/tendu leaves)

2.5%

1.875%

Scrap

1%

0.75%

Minerals, being coal or lignite or iron ore

1%

0.75%

B. CATEGORY - 2: SECTION 206C (1C)

Every person, who grants a lease or a license or enters into a contract or otherwise transfers any right or interest either in whole or in part in any parking lot or toll plaza or mine or quarry, to another person, other than a public sector company (hereafter in this section referred to as "licensee or lessee") for the use of such parking lot or toll plaza or mine or quarry for the purpose of business shall, at the time of debiting the amount payable by the licensee or lessee to the account of the licensee or lessee or at the time of receipt of such amount from the licensee or lessee, whichever is earlier, collect from the licensee or lessee of any such license, contract or lease of the nature specified in column (1) of the Table below, a sum equal to the percentage, specified in the corresponding entry in column (2) of the said Table, of such amount as income-tax:

NATURE OF CONTRACT OR LICENSE OR LEASE - SECTION 206C (1C)

RATE (Up to 13th May 2020)

Rate (From 14th May 2020 to 31st March 2021)

Parking Lot

2%

1.5%

Toll Plaza

2%

1.5%

Mining and Quarrying

2%

1.5%

C. CATEGORY - 3: SECTION 206C (1F)

Every person, being a seller, who receives any amount as consideration for the sale of a motor vehicle of the value exceeding Rs. 10,00,000, shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 1% of the sale consideration as income tax. From 14th May 2020 to 31st March 2021, this rate has been revised to 0.75%

D. CATEGORY - 4: SECTION 206C (1G)

Every person, being an authorized dealer, shall collect tax at the following rates from the remittance made out of India under the Liberalized Remittance Scheme of the RBI:

a. Section 206C (1G) (a): At the rate of 0.5%, where the amount being remitted is towards repayment of the loan, which is obtained from a banking company (including any bank or banking institution) or any other financial institution notified by the Central Government under section 80E, for the purpose of pursuing any education. If the buyer does not furnish his PAN, the tax shall be collected at the rate of 10% in accordance with Section 206CC;

b. Section 206C (1G) (b): Where the amount is remitted for any other purpose, the tax shall be collected at the rate of 5% if the buyer has furnished his PAN, otherwise tax shall be collected at the rate of 10% in accordance with Section 206CC.

E. CATEGORY - 5: SECTION 206C (1G)

Every person, being a seller of an overseas tour programme package, shall collect tax at the rate of 5% if the buyer has furnished his PAN, otherwise, the tax shall be collected at the rate of 10% in accordance with Section 206CC.

F. CATEGORY - 6: SECTION 206C (1H)

Every person, being a seller who receives any amount as consideration for the sale of any goods, shall collect tax at the rate of 0.1% if the aggregate value of such sale in any previous year exceeds Rs. 50 lakhs. The rate shall be 0.075% till 31st March 2020.

Who is the person liable to furnish TCS Statements?

Every person responsible for the collection of tax at source shall be required to furnish quarterly statements in respect thereof.

What is the Form for filing TCS statements?

Quarterly TCS statements shall be furnished in Form No. 27EQ

 

What is the due date of filing of TCS Statements?

Quarter Ending of the Financial Year

Due Dates

30th June

15th July of the financial year

30th September

15th October of the financial year

31st December

15th January of the financial year

31st March

15th May of the financial year immediately following the financial year in which collection is made.

 

In which mode can users furnish TCS Statement Electronically?

The quarterly TCS statement shall be furnished electronically in any of the following modes:

a. Furnishing the statement electronically under digital signature; or
b. Furnishing the statement electronically along with the verification of the statement in Form 27A or verified through an electronic process.

Click here to download: TCS Rate Chart for FY 2019-20 and FY 2020-21


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Category Income Tax, Other Articles by - Aishna Kukreja 



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