Tax Collection at source

By V Surya, Assistant Professor

 Tax Collection at Source
• Overview of Tax Collection at source.

• Legal Provisions relating Tax collection at

source.

• Goods comes under the Tax Collection at

source.
 Definition.

• goods are utilized for the purpose of

manufacturing, processing, or producing
things, the taxes are not payable.

• If the same goods are utilized for trading

purposes then tax is payable.
 Section 206C
• Section 206C of the Income Tax Act, 1961.

• Profits and gains from the business of trading in alcoholic

liquor, forest produce, scrap, etc:
• 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 such amount as
Income Tax.
 Nature of Goods.
• (i) Alcoholic Liquor for human consumption-
One per cent

• (ii) Tendu leaves-Five per cent

• (iii) Timber obtained under a forest lease-Two

and one-half percent.
 Cont.,
• (iv) Timber obtained by any mode other than
under a forest lease-Two and one-half per
cent
• (v) Any other forest produce not being timber
or tendu leaves-Two and one-half per cent
• (vi) Scrap-One per cent
• (vii) Minerals, being coal or lignite or iron ore-
One per cent
 Classification
• Classification of sellers and buyers under TCS:
• sellers for tax collected at source:
• 1. Central Government
• 2. State Government
• 3. Local Authority
• 4. Statutory Corporation or Authority
 Cont.,
• 5. Company registered under Companies Act
• 6. Partnership firms
• 7. Co-operative Society
• 8. Any person or HUF who is subjected to an
audit of accounts under Income tax act for a
particular financial year.
 Buyers
• Few buyers are liable to pay the tax at source to the
sellers:
• 1. Public sector companies
• 2. Central Government
• 3. State Government
• 4. Embassy of High commission
• 5. Consulate and other Trade Representation of a
Foreign Nation
• 6. Clubs such as sports clubs and social clubs
 Certificate
•  Form 27D is the certificate issued for TCS returns filed. 
• It contains:
• a. Name of the Seller and Buyer
• b. TAN of the seller i.e who is filing the TCS return
quarterly
• c. PAN of both seller and buyer
• d. Total tax collected by the seller
• e. Date of collection
• f. The rate of Tax applied
 TCS Exemptions
• Tax collection at source is exempted in the
following cases :
• 1. When the eligible goods are used for
personal consumption
• 2. The purchaser buys the goods for
manufacturing, processing or production and
not for the purpose of trading of those goods.
 Conclusions
• Section 206C of the Income Tax Act, 1961.

• Buyer vs Seller under the provisions of TCS.

• Exemptions.

• Whether it is mandatory?
 Resources.

• https://www.incometaxindia.gov.in/Pages/i-a
m/tax-collector.aspx?k=Payment%20of%20TCS
.