All about TAX Collection at Source ( TCS)

Tax Collection at Source

TCS is the amount that is collected as tax by a seller of specified goods from the buyer at the time of sale. The TCS is over and above the selling price and is paid to the Government by the seller.

It is to be noted that TCS is not only attracted at the time of sale of specified goods but at the time of some other specified transaction.

So, let us look at the transaction in which TCS is attracted.

01. Every person, who grants a lease or a licence or enters into a contract or otherwise transfers any right or interest either in whole or in part in any parking lot or toll plaza or mine or quarry, to another person, other than a public sector company for the use of such parking lot or toll plaza or mine or quarry for the purpose of business shall collect income tax at the rate 2%.

02. Every person, being a seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding Rs. 10,00,000, shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 1% of the sale consideration as income-tax

03. Every person, being a seller of an overseas tour programme package, shall collect tax at the rate of 5% if the buyer has furnished his PAN, otherwise tax shall be collected at the rate of 10%.

04. Every person, being a seller who receives any amount as consideration for sale of any goods, shall collect tax at the rate of 0.1% if the aggregate value of such sale in any previous year exceeds Rs. 50 lakh.

TAN

TAN is required for TCS collection as well. Tax Collection Account Number is a 10-digit alphanumeric number issued by the Income-tax Department (herein after referred to as ‘TAN’). TAN is required to be obtained by all persons who are responsible for collection of tax at source (‘TCS’).

Persons liable to apply for TAN

Every person who is liable to collect tax at source is required to obtain TAN.

Relevance of TAN

It is mandatory to quote TAN in following documents:

(a) TCS statements i.e. return

(b) Challans for payment of TCS

(c) TCS certificates

(d) Other documents as may be prescribed

Penalty

If a person fails to apply for TAN or failed to quote or quotes incorrect TAN in the above specified documents, a penalty of Rs. 10,000 shall be levied.

Person liable to furnish TCS statement

Every person responsible for collection of tax at source shall be required to furnish quarterly statements in respect thereof.

Form for filing TCS statements

Quarterly TCS statements shall be furnished in Form No. 27EQ

Due date of filing of TCS statements

The due dates for filing quarterly TCS statements are as follows:-

01.For the Quarter ending 30th June, it is 15th July of the financial year.

02.For the Quarter ending 30th September, it is 15th October of the financial year.

03.For the Quarter ending 31st December, it is 15th January of the financial year.

04.For the Quarter ending 31st March, it is 15th May of the financial year immediately following the financial year.

Furnishing of TCS statement electronically

The quarterly TCS statement shall be furnished electronically in any of the following mode:

a) Furnishing the statement electronically under digital signature; or

b) Furnishing the statement electronically along with the verification of the statement in Form 27A or verified through an electronic process.

Due date for deposit of TCS to the credit of Central Government:

Tax collected at source shall be deposited to the credit of Central Government in accordance with the following provisions:

1) In case tax is collected by an office of the Government:

Where tax is paid without production of an income-tax challan, on the same day when tax is collected.

Where payment of tax is accompanied by an income-tax challan, on or before 7 days from the end of the month in which tax is collected.

2) In case tax is collected by non-government persons, within one week from the last day of the month in which tax is collected.

Mode of deposit TCS:

Taxes collected at source shall be deposited to the credit of the Central Government in following modes:

1) E-Payment: E-Payment is mandatory for:

a) All the corporate assesses;

b) All assesses (other than company) to whom provisions of section 44AB of the Income Tax Act, 1961 are applicable. 

2) Physical Mode: By furnishing the Challan No. 281 in the authorized bank branch

Consequences if default is made in payment of TCS: 

A collector would face the following consequences if he fails to collect TCS or after collecting the same fails to deposit it to the credit of Central Government’s account:

a) Levy of interest: If the person responsible for collecting tax at source does not collect it or after collecting fails to pay it to the Government, he shall be liable to pay simple interest at the rate of 1% per month or part thereof on the amount of such tax from the date on which such tax was collectible to the date on which the tax was actually paid and such interest shall be paid before furnishing the quarterly statement for each quarter.

b) Levy of Penalty: If any person fails to collect the whole or any part of the tax, then such person shall be liable to pay by way of penalty under Section 271CA, a sum equal to the amount of tax which such person failed to collect.

c) Prosecution: If a person fails to pay to the credit of the Central Government the tax collected by him he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.