Tax Collected At Source Rates in India

Tax Collected At Source Rates in India

Tax collected at source (TCS) is applied on high-value product purchase.Seller of the product will collect tax.Buyer will pay TCS along with goods cost.The TCS provision is not logical. Government of India uses to track black money. By enforcing TCS, The government will know about high-value buyers.Section 206C of income tax act, 1961 specifies on which TCS is applied.

TCS rates in India are as follows:

  • Liquor of alcoholic nature that is consumption by humans – 1.00%
  • Timber wood when Collected from forest under lease – 2.50%
  • Tendu leaves – 5.00%
  • Timber wood when collected not from forest under lease – 2.50%
  • A forest produce other than tendu leaves and timber – 2.00%
  • Scrap – 1.00%
  • For toll plaza, parking, quarrying, and mining – 2.00%
  • Minerals including lignite,coal or iron ore – 1.00%
  • Bullion exceeds over Rs 2lakhs - 1.00%
  • Jewelry that exceeds over Rs 5 lakhs – 1.00%

This is not applicable when the buyer furnishes a declaration in form 27C to the person who is responsible for collecting TCS, that the goods mentioned above are used for purpose of manufacturing, processing or producing articles or things and not for the purpose of trading.

Impact of TCS:

The TCS will be useful to the black money as it gives buyers information.But it has increased for both sellers and buyers.
  • Before buying big car buyer has to arrange 1% extra money.
  • Buyer cannot take delivery on same day for cash payment due to TCS.
  • If you are not liable to pay any tax or your employer has deducted enough tax, the TCS credit would given back to you in the form of income tax refund.
  • Seller has to do more documentation for the TCS.
  • Seller has to deposit the TCS on time.

Process of TCS:

We know now what TCS is. On which product it is applicable and its rates.Now let us learn process of TCS collection.

  • Once the product is finalised by buyer, the seller asks the payment mode.
  • If vehicle value exceeds Rs 10 lacs, tax is applied here.
  • If buyer gives Rs 2 lacs or more in cash mode, the TCS is applicable.
  • Seller will calculate the TCS according to given rates. It is 1% for consumers.
  • Seller would ask PAN of the buyer.
  • Seller would ask TCS along with the purchase value of the product or service. The buyer would give the value of purchase plus TCS to the seller.
  • After Collecting the amount, the seller would give a certificate of TCS.
In this post,you have learned about the Tax Collected at source. It is different from TDS and rate is normal. The seller of a product collects TCS from the buyer.It is a provision to check and track the black money.

Best TAX advice for Freelancers, Professionals, Trader and Web based agencies.

  • CA Assisted filing for saving tax
  • Support on Call/Skype/Email
FREE 10* min of consultation