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FAQs

All that you need to know...

FAQs

faqs

FAQ

What is Tax Collected at Source (TCS)?

Tax Collected at Source (TCS) is a tax payable by a seller which he collects from the buyer at the time of sale of goods. Section 206 of the Income Tax Act mentions the list of goods on which the seller should collect tax from buyers.

Who is a Seller for TCS?

A seller is categorized as any individual or organization authorized under Tax Collected at Source. The following are defined as Sellers –

1. Central Government
2. State Government
3. Statutory Corporation or Authority
4. Local Authority
5. Company
6. Co-operative Society
7. Partnership Firms
8. Any Individual or Hindu Undivided Family (HUF) defined under the Section 44AB, who has gross receipts or total sales that exceed the specified financial restricts based on the previous year

Who is a Buyer for TCS?

A buyer is categorsied as any individual, who receives the actual goods or the rights of receiving goods at a tender, auction, sale, or other modes. All individuals (except for the below – mentioned list of individuals and organizations) are classified as buyers for TCS –

1. Public Sector Entities
2. Central Government
3. State Government
4. Consulates and any other Trade Representations of a Foreign Nation
5. High Commission Embassies
6. Clubs such as social clubs or sports clubs

What Goods & Transactions Covered under TCS Provisions?

The following goods and/or transactions are considered for Tax Collected at Source –

1. Liquors of alcoholic nature including IMFL (Indian Made Foreign Liquor) that are deemed for human consumption
2. Timber wood obtained from a leased forest area
3. Tendu Leaves
4. Timber wood obtained from any mode other than leased
5. Forest produces (other than timber and Tendu leaves)
6. Scrap
7. Parking lot tickets, Toll Plaza, Mining and Quarrying
8. Minerals that include iron ore, lignite or coal
9. Bullion having valuation over Rs. 2 lakh
10. Jewellery whose value exceeds Rs. Five lakhs
11. Motor vehicle purchases over Rs. 10 Lakhs

What are the TCS Rates Applicable in India?

The rates of TCS for various goods and transactions are listed in the table below (source – Income Tax Department of India.)

Kindly note that the interest charges for any late payment of the TCS are 1% for every month delayed.

Type of Goods Existing TCS Rate (in %) Reduced TCS Rates (14/05/2020 to 31/03/2021
Liquors of alcoholic nature including IMFL (Indian Made Foreign Liquor) that are deemed for human consumption 1.00 NA
Timber wood obtained from a leased forest area 2.50 1.875%
Tendu Leaves 5.00 3.75%
Timber wood obtained from any mode other than leased 2.50 1.875%
Forest produces (other than timber and Tendu leaves 2.50 1.875%
Scrap 1.00 0.75%
Parking lot tickets, Toll Plaza, Mining and Quarrying 2.00 1.5%
Minerals that include iron ore, lignite or coal 1.00 0.75%
Bullion having valuation over Rs. 2 lakh or Jewelry whose value exceeds Rs. Five lakhs 1.00
Purchase of Motor vehicle exceeding Rs. 10 Lakhs 1.00 0.75%
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