Tcs on coal sale

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Rakesh Bhalotia (Querist)
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29 July 2014 One of my client is D.O. holder of coal under in Jharkhand State Mineral Development Corporation Ltd., Ranchi. The department has deducted TCS from every bill of coal and as per law My client's liability is deduct TCS from every purchaser of coal and deposit in to bank & submit quarterly TCS return. But most of the purchaser have no PAN card and they have not submitting income tax return. So in this stage what should be do?

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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29 July 2014 then the rate of tcs shall be 20% in case of no pan details submitted to u.

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Rakesh Bhalotia

Rakesh Bhalotia (Querist)
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29 July 2014 I am not satisfying in this reply please guide me other way.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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26 July 2025 Got it, here’s what your client (the D.O. holder of coal) should do when purchasers don’t have PAN or don’t file income tax returns:

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### Situation:

* Your client **is required to collect TCS on sale of coal** and deposit it with the government.
* Many purchasers **do not have PAN cards** and **do not file income tax returns**.
* What is the right approach?

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### What your client should do:

1. **Collect TCS regardless of purchaser’s PAN:**

* Under **Section 206C(1)**, TCS @1% must be collected by the seller (your client) on every sale of coal.
* This obligation applies even if the buyer **does not have a PAN** or is **not filing returns**.

2. **Apply higher TCS rate if PAN is not provided:**

* As per **Section 206CC**, if the buyer does not furnish PAN, the seller must collect TCS at a higher rate (typically twice the normal rate or 5%, whichever is higher).
* So, if a purchaser has no PAN, your client should collect TCS at this higher rate from them.

3. **Maintain proper records:**

* Keep record of buyers who don’t provide PAN and the higher TCS collected.
* Inform purchasers about the importance of furnishing PAN for correct TCS rate.

4. **File TCS returns on time:**

* Your client must **deposit TCS collected to the government** and **file quarterly TCS returns (Form 27EQ)**.
* For buyers without PAN, mention details properly in the returns.

5. **Encourage buyers to get PAN and file returns:**

* Buyers without PAN face higher TCS rates and difficulty in claiming credit.
* Your client can request buyers to get PAN cards and file income tax returns to avoid higher TCS.

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### Summary:

| Scenario | TCS Rate | Action Required by Seller (Your Client) |
| ----------------------- | ------------------------ | ---------------------------------------------- |
| Buyer has PAN | 1% | Collect TCS @1% |
| Buyer does NOT have PAN | Higher rate (usually 5%) | Collect TCS @ higher rate as per Section 206CC |

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### Important Notes:

* Your client **cannot avoid collecting TCS** just because the buyer doesn’t have PAN or files no return.
* Failure to collect or deposit TCS properly can attract penalties.
* Buyers without PAN may face **TDS/TCS mismatches** leading to complications in their tax returns.

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If you want, I can help draft a notice or communication to your client’s buyers to encourage PAN submission and compliance. Would you like me to do that?

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