askvity

Who Collects TCS?

Published in Tax Collection at Source 3 mins read

A seller collects Tax Collected at Source (TCS).

Tax Collected at Source (TCS) is a mechanism in the taxation system where a seller collects tax from the buyer at the time of the sale of specific goods. This tax amount collected by the seller is then deposited with the government.

According to the provided reference:

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.

How TCS Collection Works

The process involves:

  1. Seller Identification: Certain specified sellers are mandated to collect TCS on specific transactions.
  2. Collection Trigger: TCS is collected at the time of debiting the buyer's account or receiving the payment, whichever is earlier.
  3. Buyer Payment: The buyer pays the seller the cost of the goods plus the applicable TCS amount.
  4. Government Deposit: The seller deposits the collected TCS amount with the government within the stipulated time frame.

Goods Subject to TCS

Section 206 of the Income Tax Act specifies the goods on which TCS is applicable. Examples often include:

  • Alcoholic Liquor for Human Consumption
  • Tendu Leaves
  • Timber obtained under a forest lease
  • Timber obtained by any mode other than forest lease
  • Any other forest produce not being timber or tendu leaves
  • Scrap
  • Minerals, being coal or lignite or iron ore
  • Sale of Motor Vehicle exceeding a specified value
  • Overseas Tour Program Package
  • Liberalised Remittance Scheme (LRS) for foreign remittances
  • Sale of goods exceeding a specified threshold

This collection duty firmly lies with the seller of these specified goods.

Role of the Seller

The seller acts as a collecting agent for the government. They are responsible for:

  • Collecting the correct TCS rate from eligible buyers.
  • Depositing the collected tax to the government account.
  • Issuing a certificate to the buyer for the tax collected.
  • Filing quarterly TCS returns.

In summary, the entity responsible for collecting TCS is the seller of the goods or services specified under the relevant tax laws.

Related Articles