Tax Collected at Source

Tax Collected at Source (TCS) is income tax collected by seller in India from payer on sale of certain items. It is provided in section 206C of Income Tax Act 1961. The seller has to collect tax at specified rates from the payer who has purchased these items :

• Liquor of alcoholic nature, made for consumption by humans

1.00%

Timber wood when collected from a forest that has been leased

2.50%

Tendu Leaves

5.00%

Timber wood when not collected from a forest that has been leased, but any other mode

2.50%

A forest produce other than tendu leaves and timber

2.00%

Scrap - 1.00%

Toll Plaza, Parking lot, Quarrying and Mining - 2.00%

Minerals that include lignite or coal or iron ore - 1.00%

Bullion that exceeds over Rs. 2 lakhs/ Jewelry that exceeds over Rs. 5 lakhs.- 1.00%

Let’s take an example to better understand the process. If the purchase value of a box of chocolates is Rs. 100, the buyer ultimately pays Rs. 20 where the Rs. 20 is the tax collected at source. The amount is then given to certain designated branch of banks who have been given the authorization to receive the payments. The seller is only responsible for the collection of this tax from the buyer and actually not paying it himself or herself. The tax is meant to be collected when selling goods, transactions, when issued a receipt of a sum in cash from the buyer or when issuing a cheque or draft, whichever mode is payed by the earliest.

References

http://www.incometaxindia.gov.in/Pages/acts/income-tax-act.aspx