Collection of Tax at Source - Tax Administration, Income Tax Laws

Introduction

Collection of Tax at Source (TCS) is a tax that is collected by the seller from the buyer at the time of sale of certain specified goods. The seller then deposits this tax with the government. The buyer can claim the TCS credit while filing their income tax return.

TCS Rates

The TCS rates are specified under the Income Tax Act and vary based on the type of goods sold. The rates generally range between 0.1% to 5%.

TCS Applicability

TCS is applicable on the sale of certain specified goods such as:

- Alcoholic liquor for human consumption
- Timber obtained under a forest lease
- Tendu leaves
- Minerals, being coal or lignite or iron ore
- Scrap
- Parking lot
- Toll plaza
- Mining and quarrying

TCS Return Filing

The seller who collects TCS is required to file a TCS return in Form 27EQ. This return needs to be filed quarterly and includes details of the TCS collected and deposited with the government.

TCS Credit

The buyer who has paid TCS can claim the TCS credit while filing their income tax return. The TCS credit can be claimed against income tax liability or can be refunded if the TCS paid is more than the income tax liability.

Conclusion

TCS is an important tax collection mechanism under the Income Tax Act. It helps the government in collecting taxes from the sale of certain specified goods. It is important for both sellers and buyers to understand the applicability of TCS and comply with the TCS provisions.