Tax Collected at source (TCS) Section 206C

This article explains briefly about Tax Collected at Source (TCS) u/s 206C

According to Section 206C of Income-tax act 1961.

Every person, being a seller shall, at the time of debiting the buyer account or at the time of receipt of 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 in column (2) of the Table below, a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of such amount as income-tax:

 

TCS Rate Chart

Section No	Nature of Payment	TCS Rates (%)
206C	Scrap	1
206C	Tendu Leaves	5
206C	Timber obtained under a forest Lease or other mode	2.5
206C	Any other forest produce not being a timber or tendu leaves	2.5
206C	Alcoholic Liquor for human consumption	1
206C	Parking Lot, toll plaza, mining and qurraying	2
206C	Minerals, being coal or lignite or iron ore	1
206C	Bullion if consideration ( excluding any coin/article weighing 10grams or less) exceeds Rs 2 Lakhs	1
206C	TCS on sale in cash of any goods (other than bullion/jewelry) Threshold limit- 2,00,000	1
206C	TCS on Providing of any services( other than Ch-XVII-B )  Threshold limit- 2,00,000	1
206C	TCS on Motor Vehicle  Threshold limit- 10,00,000	1

• No TCS shall be made in the case of a buyer, who is resident in India, if such buyer furnishes to the person responsible for collecting tax, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the goods referred to in column (2) of the aforesaid Table are to be utilised for the purposes of manufacturing, processing or producing articles or things or for the purposes of generation of power and not for trading purposes. 
  
  
• "mining and quarrying" shall not include mining and quarrying of mineral oil[petroleum and natural gas].
• The person responsible for collecting tax under this section shall deliver or cause to be delivered to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner one copy of the declaration referred to above on or before the 7th day of the month next following the month in which the declaration is furnished to him.

TCS in case of Liberalised Remittance Scheme of the Reserve Bank of India Section 206C(1G)

Every person,—

(a) being an authorised dealer, who receives an amount, for remittance out of India from a buyer, being a person remitting such amount out of India under the Liberalised Remittance Scheme of the Reserve Bank of India;

(b) being a seller of an overseas tour program package, who receives any amount from a buyer, being the person who purchases such package,

shall, at the time of debiting the amount payable by the buyer or at the time of receipt of such amount from the said buyer, by any mode, whichever is earlier, collect from the buyer, a sum equal to 5% of such amount as income-tax:

• NO TCS if the amount or aggregate of the amounts being remitted by a buyer is less than Rs 7,00,000 in a financial year and is for a purpose other than purchase of overseas tour program package.
• Sum to be collected by an authorised dealer from the buyer shall be equal to 5% of the amount or aggregate of the amounts in excess of Rs 7,00,000 remitted by the buyer in a financial year, where the amount being remitted is for a purpose other than purchase of overseas tour program package.
  Provided that the authorised dealer shall collect a sum equal to 1.5% of the amount or aggregate of the amounts in excess of Rs 7,00,000 remitted by the buyer in a financial year, if the amount being remitted out is a loan obtained from any financial institution as defined in section 80E, for the purpose of pursuing any education.

• Provided also that the authorised dealer shall not collect the sum on an amount in respect of which the sum has been collected by the seller
• Provided also that the provisions of this sub-section shall not apply, if the buyer is,—
  
  (i) liable to deduct tax at source under any other provision of this Act and has deducted such amount;
  
  (ii) the Central Government, a State Government, an embassy, a High Commission, a legation, a commission, a consulate, the trade representation of a foreign State, a local authority as defined in the Explanation to clause (20) of section 10 or any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.
  
  Explanation.—For the purposes of this sub-section,—
  
  (i) "authorised dealer" means a person authorised by the Reserve Bank of India under sub-section (1) of section 10 of the Foreign Exchange Management Act, 1999 (42 of 1999) to deal in foreign exchange or foreign security;
  
  (ii) "overseas tour programme package" means any tour package which offers visit to a country or countries or territory or territories outside India and includes expenses for travel or hotel stay or boarding or lodging or any other expenditure of similar nature or in relation thereto.

Section 206C(1H): TCS on sale of goods exceeding value of 50Lakhs.

Every person, being a seller, who receives any amount as consideration for sale of any goods of the value or aggregate of such value exceeding Rs 50,00,000 in any previous year, other than the goods being exported out of India or goods covered in sub-section (1) or sub-section (1F) or sub-section (1G) of section 206C shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 0.1% of the sale consideration exceeding Rs 50,00,000 as income-tax:

Provided that if the buyer has not provided the Permanent Account Number or the Aadhaar number to the seller, then the provisions of clause (ii) of sub-section (1) of section 206CC shall be read as if for the words "five per cent", the words "one per cent" had been substituted:

Provided further that the provisions of this sub-section shall not apply, if the buyer is liable to deduct tax at source under any other provision of this Act on the goods purchased by him from the seller and has deducted such amount.

Explanation.—For the purposes of this sub-section,—

(a) "buyer" means a person who purchases any goods, but does not include,—

• the Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or
  
• a local authority as defined in the Explanation to clause (20) of section 10; or
  
  
• a person importing goods into India or any other person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein;

(b) "seller" means a person whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the sale of goods is carried out, not being a person as the Central Government may, by notification in the Official Gazette, specify for this purpose, subject to such conditions as may be specified therein.

Addition Notes for Section 206C

• Any person collecting any amount under this section shall pay within the prescribed time the amount so collected to the credit of the Central Government or as the Board directs
  
• Any amount collected in accordance with the provisions of this section and paid to the credit of the Central Government shall be deemed to be a payment of tax on behalf of the person from whom the amount has been collected and credit shall be given to such person for the amount so collected in a particular assessment year in accordance with the rules as may be prescribed by the Board from time to time.
  
  
• Every person collecting tax in accordance with the provisions of this section shall furnish to the buyer a certificate to the effect that tax has been collected, and specifying the sum so collected, the rate at which the tax has been collected and such other particulars as may be prescribed
  
  
• Any person responsible for collecting the tax who fails to collect the tax in accordance with the provisions of this section, shall, notwithstanding such failure, be liable to pay the tax to the credit of the Central Government in accordance with the provisions of sub-section (3).
  
  
• If any person responsible for collecting tax in accordance with the provisions of this section does not collect the whole or any part of the tax or after collecting, fails to pay the tax as required by or under this Act, he shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of the tax:
  
  Provided that any person responsible for collecting tax in accordance with the provisions of sub-section (1) and sub-section (1C), who fails to collect the whole or any part of the tax on the amount received from a buyer or licensee or lessee or on the amount debited to the account of the buyer or licensee or lessee shall not be deemed to be an assessee in default in respect of such tax if such buyer or licensee or lessee—
  
  (i) has furnished his return of income under section 139;
  (ii) has taken into account such amount for computing income in such return of income; and
  (iii) has paid the tax due on the income declared by him in such return of income,
  
  and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed:
  
  Provided further that no penalty shall be charged under section 221 from such person unless the Assessing Officer is satisfied that the person has without good and sufficient reasons failed to collect and pay the tax.
• Without prejudice to the provisions of sub-section (6), if the person responsible for collecting tax does not collect the tax or after collecting the tax fails to pay it as required under this section, he shall be liable to pay simple interest at the rate of one per cent 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 in accordance with the provisions of sub-section (3):
  
  Provided that in case any person responsible for collecting tax in accordance with the provisions of this section, fails to collect the whole or any part of the tax on the amount received from a buyer or licensee or lessee or on the amount debited to the account of the buyer or licensee or lessee but is not deemed to be an assessee in default under the first proviso of sub-section (6A), the interest shall be payable from the date on which such tax was collectible to the date of furnishing of return of income by such buyer or licensee or lessee.
  
  
• Where the tax has not been paid as aforesaid, after it is collected, the amount of the tax together with the amount of simple interest thereon referred to in sub-section (7) shall be a charge upon all the assets of the person responsible for collecting tax.
  
  
• Where the Assessing Officer is satisfied that the total income of the buyer or licensee or lessee justifies the collection of the tax at any lower rate than the relevant rate specified in sub-section (1) or sub-section (1C), the Assessing Officer shall, on an application made by the buyer or licensee or lessee in this behalf, give to him a certificate for collection of tax at such lower rate than the relevant rate specified in sub-section (1) or sub-section (1C).
  
  
• Where a certificate under sub-section (9) is given, the person responsible for collecting the tax shall, until such certificate is cancelled by the Assessing Officer, collect the tax at the rates specified in
  

Last modified date 08/08/2020.
Source "INCOMETAXINDIA"

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