Tax in simple words refers to a compulsory contribution made to the government on a product, income or activity. The government uses the revenue from taxes to discharge the duties it has towards the people.
I would like to discuss through this article, the concept of Tax collected at source.
Tax Collection at Source or TCS, as the name says, means collection of tax at source by the seller or collector, from the buyer of the goods. The Income Tax act, 1961 has prescribed that tax be collected by the seller from the buyer and deposited to the credit of the government.
Section 206C deals with Tax collection at source.
Before we go into the details, it is important to know who is a seller and who is a buyer.
A seller includes:
a. The Central and State Government.
b. Local authority.
c. Statutory Corporation or Authority.
d. Company.
e. Firm.
f. Co-operative society.
g. Individual or Hindu undivided family (HUF) if covered under section 44AB
A buyer is one who gets in any sale by way of auction, tender or any other mode, specified goods or right to receive any such goods, but will not include:
a. Public sector Company.
b. Central/ state Government.
c. Embassy, a high commission, legation, consulate and the trade representation of a foreign state
d. A club and
e. A buyer in the retail sale of such goods purchased for personal consumption.
Tax is to be collected at the time of debiting to the account of the buyer, the amount payable by him or at the time of receipt of amount from the buyer, whichever is earlier.
The following is the list of applicable rates and the goods on which tax is to be collected by the seller:
The Tax Collection at Source Rates for the Financial Year 2013-13 is tabulated below:
|
Sl. No. |
Nature of Goods |
Rates in % |
|
|
01.04.2012 |
01.07.2012 |
||
|
1. |
Alcoholic liquor for human Consumption |
1 |
1 |
|
2. |
Tendu leaves |
5 |
5 |
|
3. |
Timber obtained under forest lease |
2.5 |
2.5 |
|
4. |
Timber obtained by any mode other than a forest lease |
2.5 |
2.5 |
|
5. |
Any other forest produce not being timber or tendu leaves |
2.5 |
2.5 |
|
6. |
Scrap |
1 |
1 |
|
7. |
Parking lot |
2 |
2 |
|
8. |
Toll plaza |
2 |
2 |
|
9. |
Mining & Quarrying |
2 |
2 |
|
10 |
Minerals, being coal or lignite or iron ore |
NA |
1 |
|
11 |
Bullion or jewellery (if the sale consideration is paid in cash exceeding INR 2 lakhs) |
NA |
1 |
Deposit of TCS amount- The seller shall deposit the tax amount within seven days of the last day of the month in which the collection is made.
Issue of TCS certificate- The seller shall issue the TCS certificate within one month from the end of the month during which amount was collected /debited in Form 27D
The seller shall file quarterly returns in Form 26EQ by 15th July, 15th September, 15th January and 30thApril for respective quarters.
Tax at lower rate:
a. A buyer can apply to the Assessing Officer in Form 13 for tax collection at lower rate.
b. On receiving application in Form 13, the Assessing officer, if satisfied, may issue such certificate directly to the seller under advice to the buyer. This rate shall be applicable only for that specific seller in respect of whom the certificate is issued.
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