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
|Section||Type of Goods and service||TCS Rate|
|206(1)||Alcoholic liquor for human consumption||1%|
|206(1)||Timber obtained by any mode other than under a forest lease||2.5%|
|206(1)||Timber obtained under a forest lease||2.5%|
|206(1)||Any other forest produce not being timber or tendu leaves||2.5%|
|206(1)||Minerals being lignite, coal and iron ore||1%|
|206(1) (1F)||Purchase of Motor vehicle exceeding Rs. 10 Lakhs||1%|
|206(1)||Mining and Quarrying||2%|
|206(1) (1G)||Remittance (Liberalized remittance scheme) exceeding Rs. 7 Lakhs||5%|
|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 Packages||5%|
|206(1) (1H)||Sale of Goods exceeding Rs. 50 Lakhs||0.1%|
|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:
|Status||Payment Exceeds||Surcharge Rates|
|Non Resident Individuals/HUF||Payment more than Rs. 50 lakh to Rs. 1 crore||10%|
|Payment Rs. 1 crore to Rs. 2 crore||15%|
|Payment Rs. 2 crore to Rs. 5 crore||25%|
|Payment exceeding Rs. 5 crore||37%|
|Non Resident— Co-operative society/firm||Payment more than Rs.1 crore||12%|
|Non-domestic company||Payment more than Rs. 1 crore but not more than Rs. 10 crore||2%|
|Non-domestic company||Payment more than than Rs. 10 crore||5%|
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
- 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:
|Q1||1 April 2021 – 30 June 2021||15th July 2021|
|Q2||1 July 2021 – 30 September 2021||15th October 2021|
|Q3||1 October 2021 – 31 December 2021||15th January 2021|
|Q4||1 January 2022 – 31 March 2022||15th 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 Ending||Date for TCS Certificate in form 27D|
|30th June 2021||30th July 2021|
|30th September 2021||30th October 2021|
|31st December 2021||30th January 2022|
|31st March 2022||30th May 2022|