tcs

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student (Querist)
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18 May 2011 whether TCS credit is available to buyer/seller?

a/d to reading of sec buyer is eligible for such credit

Since it is shown on dr side of P & l a/c therefore it wil be disallowed as per sec 40(a)(ii)

Amol Gopal Kabra (CA,CS,DISA)

Amol Gopal Kabra (CA,CS,DISA) (Expert)
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19 May 2011 TCS is tax collected at source by seller. Hence the buyer gets the credit. It wont be disallowed in the case of buyer. If the seller fails to collect tax at source, such amount shall be added in the income of the seller.

student

student (Querist)
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20 May 2011 but why........... it is in the natuure of direct tax as if buyer has paid tax on its own income which he is going to earn by sale of that product

Asha Kanta Sharma online

Asha Kanta Sharma online

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26 July 2025 Good question! Here's the clarity on **TCS (Tax Collected at Source)** credit and its tax implications:

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### What is TCS?

* TCS is **tax collected by the seller** from the buyer at the time of sale of specified goods or services.
* The seller **collects the tax and deposits it with the government** on behalf of the buyer.
* It is an advance tax paid by the buyer.

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### Who gets the credit?

* **The buyer** is eligible to claim **credit for TCS** against their total tax liability.
* This is because TCS is treated as tax paid by the buyer, although collected by the seller.
* The **seller is only a collector**, not the person liable to pay the tax ultimately.

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### Why it is not disallowed under section 40(a)(ii)?

* Section 40(a)(ii) deals with **disallowance of expenses where tax is not deducted or deposited by the deductor** (TDS cases).
* But TCS is **collected by the seller and deposited by the seller**, not deducted from salary or payments.
* So, disallowance under 40(a)(ii) **does not apply** here.
* The buyer's payment of amount inclusive of TCS is **not an expense disallowed**; the buyer claims tax credit.

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### Summary:

* Buyer can **claim credit of TCS**.
* Seller deposits TCS; if seller fails to collect and deposit, the amount is added to seller's income.
* Buyer does **not bear additional tax burden**; TCS is **adjusted against their tax liability**.

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If you want, I can help with legal references or detailed explanation of how to show TCS in books and income tax returns.

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