TCS ISSUE

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TARIQUE RIZVI (Querist)
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18 October 2021 Respected Sir,

One of our suppliers has added 0.10% TCS against the taxable value as follows

Taxable value Rs 1,00,000 ( Rupees One Lacs )
Add TCS @ 0.10% Rs 100 (Rupees One Hundred)
Add IGST 0.10% Concessional Rate Rs 100 (Rupees One Hundred)
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Total Bill Value Rs 1,00,200
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Sales Turnover of the suppliers is above Rs 50 lacs and therefore TDS shall have to be deducted @ 0.10% against taxable purchase value.

TDS shall be paid by the customer after debiting supplier’s account by the TDS amount

Who will pay TCS ? Supplier will recover from us TCS

Supplier will pay TCS or Customer will pay TCS

Please guide me and oblige.

Deepa B

Deepa B (Expert)
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19 October 2021 I hope the question was asked keeping in mind section 194Q. Ideally TDS should have been done if the above mentioned TCS is not done under section 206C [except 206C(1H)]. Because it was clarified by CBDT that 194Q has an upper hand over 206C(1H). Hence primary obligation generally rests with the buyer to deduct tax.
Having said that CBDT in it's clarification vide circular 13/2021 dated 30.6.2021 also said that "However, if, for any reason, tax has been collected by the seller under sub-section (I H) of section 206C of the Act, before the buyer could deduct tax under section 194-Q of the Act on the same transaction, such transaction would not be subject to tax deduction again by the buyer. This concession is provided to remove difficulty, since tax rate of deduction and collection are same in section 194Q and sub-section (IH) of section 206C of the Act". So in the given case if the client has already made the payment against the invoice having TCS. Then TDS need not be done again as the supplier himself will be remitting the TCS collected from client. In addition to that the supplier needs to be intimated that in future the client (i.e., the buyer) would do TDS themselves.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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26 July 2025 Hey! Here’s how the TCS situation works in your case:

### Who is responsible to pay TCS?

* **TCS (Tax Collected at Source)** is **collected and paid by the seller (supplier)**.
* The **supplier** adds TCS on the invoice and **collects it from you (the buyer)**.
* Then the **supplier deposits the collected TCS with the government**.

### What about TDS (Tax Deducted at Source)?

* TDS is different from TCS. TDS is **deducted by the buyer (you) from payments made to the supplier** and paid to the government.
* If TDS is applicable, you deduct it before making payment to the supplier and deposit it with the government.

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### In your case:

* Your supplier added **TCS @ 0.10%** on taxable value and charged it to you. This is **correct** because the supplier has turnover above Rs 50 lakhs and is liable to collect TCS.
* Supplier **collects this TCS from you and pays it to the government**.
* You **pay the supplier the invoice amount including TCS**.
* You do **NOT deduct TDS on the TCS amount**.
* If your business requires deduction of TDS on other payments to the supplier (like service payments), you will deduct and pay TDS separately.

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### To summarize:

| Responsibility | Party | Action |
| -------------------------- | -------- | ----------------------------- |
| Collect TCS | Supplier | Add TCS to invoice & collect |
| Pay TCS to Government | Supplier | Deposit TCS collected |
| Deduct TDS (if applicable) | Buyer | Deduct from payment & deposit |

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So in your example:

* Supplier charges Rs 100 as TCS (0.1% on Rs 1,00,000)
* Supplier adds IGST Rs 100 separately.
* You pay Rs 1,00,200.
* Supplier deposits Rs 100 TCS to government.
* You don’t pay TCS, you pay the invoice amount including TCS.

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If you want, I can also explain the difference between TCS and TDS or clarify further!

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