What is Tax Collection at Source(TCS) under Indian Tax

Term Tax Collection at Source(TCS)under Indian Tax


The details about Tax Collection at Source(TCS)are explained here. 

Tax Collected at Source (TCS) Under Income Tax:

Tax Collection at Source or TCS, as the name implies, means collection of tax at source by the seller or collector, from the buyer of the goods. As prescribed under Income Tax Act 1961, it is mandatory on the part of the buyer to pay a predetermined value of TCS to the seller, while purchasing a particular commodity. TCS is generally set for business or trade in alcoholic liquor, forest produce, scarp, etc. Various lease, license and contracts related to areas like parking lot, mines and toll plaza also falls under the umbrella of TCS in India. TCS is generally collected when amassed or when paid, whichever is earlier. The seller or collector who collects the tax is required to deposit it in any of the designated branches of the certified banks. Tax Collection at Source is implemented to curb tax evasion and also to facilitate proper tax collection in India. The various goods which come under the policy of TCS are listed below along with their rates.

Tax Collected at Source (TCS) is income tax collected by seller in India from payer on sale of certain items. It is provided in section 206C of Income Tax Act 1961. The seller has to collect tax at specified rates from the payer who has purchased these items:

Following are the items on which collection of TCS applicable:

Category A

  1. Alcoholic liquor for human consumption 1%
  2. Tendu leavest 5%
  3. Timber obtained under a forest lease 2.5%
  4. Timber obtained by any mode other than under a forest lease 2.5%
  5. Any other forest produce not being timber or tendu leaves2.5%
  6. Scrap 1%
  7. Minerals being coal or lignite or iron ore 1%
  8. Scrap Batteries 1%

Category B (grant of lease\license of the following)

Parking lot, toll plaza, mining and quarrying 1%

Category C

Bullion exceeding 2 lakhs, jewellry exceeding 5 lakhs, other goods& services exceeding 2 lakhs 1%

Category D

Motor vehicle exceeding 10 lakhs 1%

The information provided here is about Tax Collection at Source(TCS).  If you would you like to add more information about Tax Collection at Source(TCS), share below your thoughts.




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Ketan Shukla: What is the correct method of TCS Calculation in case of minerals being supplied. For example will it be 100 (basic rate) + 1 (tcs @ 1%) + 5.05 (5% IGST on 101) = 106.05 or 100 (basic rate) + 5 (5% IGST) + 1.05 (1% TCS on 105) = 106.05 ? Note : Total Amount remains the same but GST and TCS amount are different in above examples as accessible value is different for them.

Mohamed: Sir, I registered TCS under GST by mistake. My current status is active. Now I am not doing any trade transaction on it. Do I need to have any nil return filing. If so, how to do it and which forms have to be used. Is there any penalties are there. Give guidelines to close Tcs registration

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