Tax Collections at Source (TCS)

| 2 years ago

As per the constitution of India, Governments have the authority to collect tax within their jurisdiction and power conferred upon them. Central Government collect two type of taxes i.e. direct tax and indirect tax. Governments are solely responsible for the collection of taxes, however in many case, obligation to collect taxes is shifted to general public in the form of TDS (Tax deduction at source) and TCS (Tax collection at source).

As per section 206C of Income Tax  1961 (1) every person, being a seller shall, at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the buyer of any goods of the nature specified in column (2) of the Table below, a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of such amount as income tax

Sl no(1) Nature of Goods(2) Percentage (3)
Category A:
A1 Alcoholic Liquor for human consumption 1
A2 Tendu Leaves 5
A3 Timber obtained under a forest lease 2.5
A4 Timber obtained by any mode other than under a forest lease 2.5
A5 Any other forest produce not being timber or tendu leaves 2.5
A6 Scrap 1
A7 Minerals, being coal or lignite or iron ore 1
Category B:
B1 Parking lot, toll plaza, mining and quarrying(other than mining
and quarrying of mineral oil, petroleum and natural gas)
2
Category C:
C1 Bullion/jewellery 1

Exemption:

A. Provision of TCS in case of category A is not applicable if the buyer is:

  1.  A public sector company, the central government, a state government and an embassy, a High commission, Legation, Commission, Consulate and the trade representative, of a foreign state and a club
  2. A buyer in the retail sale of such goods purchased by him for personal consumption.
  3.  A resident who purchase goods for the purpose of manufacturing, processing or producing any article or thing or for the purpose of generation of power and not for the purpose of trading. Declaration in form 27C is required.

B. Provision of TCS in case of category B is not applicable if the licensee or lessee is a public sector company.

C. Provision of TCS in case of category C is applicable only if both the following conditions are satisfied-

(a) Sales consideration of bullion(excluding coin/article weighting 10 grams or less) exceeds Rs.2,00,000 or sale consideration of jewellery exceeds Rs.5,00,000/-.

(b) Out of sale consideration any amount is received in cash.

D. If income of buyer is exempt under section 10(26), then tax cannot be collected at source.

 

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