Tax collected at source (TCS) is the tax payable by a seller which he collects from the buyer at the time of sale. Section 206C of the Income-tax act governs the goods on which the seller has to collect tax from the purchasers.
Goods covered under TCS provisions and rates applicable to them
When the below-mentioned 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. The tax payable is collected by the seller at the point of sale.
The rate of TCS is different for goods specified under different categories:
|Type of Goods||Rate|
|Liquor of alcoholic nature, made for consumption by humans||1%|
|Timber wood under a forest leased||2.5%|
|Timber wood by any other mode than forest leased||2.5%|
|A forest produce other than Tendu leaves and timber||2.5%|
|Minerals like lignite, coal and iron ore||1%|
|Bullion that exceeds over Rs. 2 lakhs/ Jewellery that exceeds over Rs. 5 lakhs||1%|
|Purchase of Motor vehicle exceeding Rs. 10 Lakhs||1%|
|Parking lot, Toll Plaza and Mining and Quarrying||2%|
Classification of Sellers and Buyers for TCS
There are some specific people or organizations who have been classified as sellers for tax collected at source. No other seller of goods can collect tax at source from the buyers apart from the following list :
- Central Government
- State Government
- Local Authority
- Statutory Corporation or Authority
- Company registered under Companies Act
- Partnership firms
- Co-operative Society
- Any person or HUF who is subjected to an audit of accounts under Income tax act for a particular financial year.