What is TCS – Tax Collected at Source
Tax Collected at Source (TCS) is a mechanism where the seller collects tax from the buyer on specific goods at the time of sale and deposits it with the tax authorities. Governed by Section 206C of the Income-tax Act, this provision ensures that tax is collected at the point of transaction.
Example of TCS
When a furniture costs Rs. 1000, the buyer pays an additional Rs. 200 as tax, which is collected at the point of sale. The seller collects this tax and deposits it with an authorized bank. The seller’s responsibility is solely to collect and transfer the tax, and not to pay it from their own funds.
Due Date for Depositing the TCS
- The TCS must be deposited to the government by the 7th of the next month.
- All sums collected by an office of the Government should be deposited on the same day of collection.
When to file TCS returns
Every tax collector must submit a quarterly TCS return, Form 27EQ, for the tax collected in a particular quarter. The interest on delay in payment of TCS to the government should be paid before filing the return.
Form 27D is the certificate issued for TCS returns filed. This certificate contains the following details:
- Name of the Seller and Buyer
- TAN of the seller i.e. who is filing the TCS return quarterly
- PAN of both seller and buyer
- Total tax collected by the seller
- Date of collection
- The rate of Tax applied
This certificate has to be issued within 15 days from the date of filing TCS quarterly returns. All the TCS due dates are summarised in the below table:
Quarter Ending | Due date to file Form 27EQ | Date for generating Form 27D |
On 30th June | 15th July | 30th July |
On 30th September | 15th October | 30th October |
On 31st December | 15th January | 30th January |
On 31st March | 15th May | 30th May |
