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April 15, 2021

Know all About Tax Collected at Source from 1 April 2021

by Mahesh Mara in Income Tax

Know all About Tax Collected at Source from 1 April 2021

Tax collected at source (TCS) is the tax payable by a seller which he collects from the buyer at the time of sale. Section 206C of the Income-tax act governs the goods on which the seller has to collect tax from the purchasers. The person collecting the TCS/ seller is known as collector and the buyer is known as collectee. As per section 206C seller shall collect tax from buyer at the time of debiting the account or receipt of amount of buyer whichever is earlier.

The following are the rates of TCS specified as per section 206(1) applicable for FY 2021-22

SectionType of Goods and serviceTCS Rate
206(1)Alcoholic liquor for human consumption1%
206(1)Timber obtained by any mode other than under a forest lease2.5%
206(1)Timber obtained under a forest lease2.5%
206(1)Any other forest produce not being timber or tendu leaves2.5%
206(1)Tendu leaves5%
206(1)Minerals being lignite, coal and iron ore1%
206(1) (1F)Purchase of Motor vehicle exceeding Rs. 10 Lakhs1%
206(1)Parking lot2%
206(1)Toll Plaza2%
206(1)Mining and Quarrying2%
206(1) (1G)Remittance (Liberalized remittance scheme) exceeding Rs. 7 Lakhs5%
206(1) (1G)Remittance (Liberalized remittance scheme) exceeding Rs. 7 Lakhs (In case of No PAN and Aadhaar no)10%
206(1) (1G)Overseas Tour Packages5%
206(1) (1H)Sale of Goods exceeding Rs. 50 Lakhs0.1%
206(1) (1H)Sale of Goods exceeding Rs. 50 Lakhs (In case of No PAN and Aadhaar no)1%

Surcharge and Health & Education Cess on TCS Rates

Surcharge and Health & Education Cess on TCS Rates is applicable when the purchaser is a non resident individual or a foreign company. The rate of surcharge and education cess are as follows:

StatusPayment ExceedsSurcharge Rates
Non Resident Individuals/HUFPayment more than Rs. 50 lakh to Rs. 1 crore10%
Payment Rs. 1 crore to Rs. 2 crore15%
Payment Rs. 2 crore to Rs. 5 crore25%
Payment exceeding Rs. 5 crore37%
Non Resident— Co-operative society/firmPayment more than Rs.1 crore12%
Non-domestic companyPayment more than Rs. 1 crore but not more than Rs. 10 crore2%
Non-domestic companyPayment more than than Rs. 10 crore5%

Who are sellers/ collector of TCS?

The following are the persons or organisation liable for collecting TCS:

  • Central Government
  • State Government
  • Local Authority
  • Statutory authority or corporation
  • Company
  • Partnership firms
  • Cooperative society
  • Any individual or HUF who has total sales/ gross receipts that exceeds the specified monetary limit as mentioned under section 44AB of the income tax act

Who is the buyer or collectee not liable for TCS?

The following are the persons or organization not liable for TCS:

  • Public sector entities or companies
  • Central Government
  • State Government
  • Embassy of High Commission
  • Consulate and Other trade representation of a foreign Nation
  • Clubs such as sports club and social clubs

Due dates for TCS payment and Returns:

A. Due date of TCS payment:

a) The seller must deposit the TCS amount within one week of the last day of the month in which the tax was collected i.e. 7th of the following month for instance TCS for the month of January 2021 must be paid by the seller on or before 7th of February 2021. This payment can be made in any branch of RBI, SBI or any other authorized bank or the same can also be paid electronically.

b) All sums collected by an office of the Government should be deposited on the same day of collection.

Interest on failure to pay TCS on time:

Where the tax collector responsible for collecting the tax and depositing the same to the Government does not collect the tax then such collector will be liable to pay interest of 1% per month or a part of the month. In addition to the amount of TCS he failed to collect. If after collecting doesn’t pay the tax to the Government within due dates, then he is liable for interest @ 1% per month of delay or part of the month.

Transaction when Tax Collector is exempt from TCS collection:

Tax Collector is exempt from TCS in the following cases:

a. When the eligible goods are used for personal consumption

b. The purchaser buys the goods for manufacturing, processing or production and not for the purpose of trading of those goods.

Application of Lower Rate of TCS

The buyer can apply to the Assessing Officer (TDS) for a lower rate, using Form No.13, subject to the condition that the Assessing Officer is convinced that the total income of the buyer justifies the lower rate. Where the Assessing Officer is convinced by the buyer he may issue a certificate, specifying the rate of collection u/s 206C. Currently, buyer can obtain lower deduction certificate online through the TRACES portal by submitting an application online.

Due date of filing TCS returns:

The following is the due date of TCS returns:

QuarterPeriodDue Date
Q11 April 2021 – 30 June 202115th July 2021
Q21 July 2021 – 30 September 202115th October 2021
Q31 October 2021 – 31 December 202115th January 2021
Q41 January 2022 – 31 March 202215th May 2022

Penalty for failure to file TCS return on or before due date:

It is mandatory for all collectors of tax to furnish Quarterly TCS returns (Form 27EQ) online to CPC-TDS in electronic mode within the prescribed time. The collector can also file correction statement for rectification of any mistake, add/delete or update the information already furnished. Filing of TCS return after due date is liable for Late Filing Fee of Rs.200/- per day for the period of delay from due date.

Due date of furnishing TCS certificate to the buyer

The TCS collector must issue TCS certificate in form 27D after 15 days from the due date of filing of return. The due date of issue of TCS certificate is as follows:

Quarter EndingDate for TCS Certificate in form 27D
30th June 202130th July 2021
30th September 202130th October 2021
31st December 202130th January 2022
31st March 202230th May 2022

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