1. INTRODUCTION

   TCS is the Tax Collected at Source by the seller (collector) from the buyer/ lessee (collectee/ payee).

   If the purchase value of goods is X, the amount payable by the buyer is X+Y, where Y is the value of tax at source. The seller deposits Y (tax collected at source) at any designated branch of banks authorized to receive the payment.

The seller, lessor or licensor, is responsible for the collection of tax from the buyer, lessee or licensee. The tax is collected for sale of goods, on transactions, receipt of amount from the buyer in cash or issue of cheque, draft or any other mode, whichever is earlier.

2. Classification of Seller for TCS
   1. Under TCS, a seller is defined as any of the following:
   2. Central Government
   3. State Government
   4. Any Local Authority
   5. Any Statutory Corporation or Authority
   6. Any Company
   7. Any Partnership Firm
   8. Any Co-operative Society
   1. Any individual/HUF whose total sales or gross receipts exceed the prescribed monetary limits as specified under section 44AB during the previous year

3. Classification of Buyer for TCS

A buyer is classified as a person who obtains goods or the right to receive goods in any sale, auction, tender or any other mode. The following are not included:

1. Public Sector Companies
2. Central Government
3. State Government
4. Embassy of High Commission, Consulate and other Trade Representation of a Foreign State
5. Any Club, such as social clubs, sports clubs and the like

4. Goods and Transactions classified under TCS

Goods and transactions classified under TCS are listed below:

1. Alcoholic liquor for human consumption including Indian Made Foreign Liquor (IMFL)
2. Tendu leaves
3. Timber obtained under a forest lease
4. Timber obtained by any mode other than under a forest lease
5.  Any other forest produce not being Timber or Tendu
6. Scrap (Scrap means waste  and  scrap from the manufacture or mechanical working of materials which is usable as such because of breakage, cutting up, wear and tear and other reasons)
7. Licensing or leasing of Parking Lot, Toll Plaza
8. Mining and quarrying

5. Certificate of TCS

1. The certificate of collection of tax at source has to be submitted in Form No-27D by persons collecting tax at source within a week from the last day of the month in which the tax was collected.
2. If there is more than one certificate to be issued to a buyer for tax collected at source with respect to the period ending September 30 and March 31 in the financial year, then the person collecting the tax on request from the buyer can issue a consolidated certificate within one month from the end of such period.
3. If an issued TCS certificate is lost, the person collecting tax at source may issue a duplicate certificate on plain paper, with necessary details as contained in Form-27D.
4. The Assessing Officer (AO), before giving credit for the tax collected at source on the basis of the duplicate certificate, has to get the payment certified and obtain an Indemnity Bond from the assesse.

6. TCS Exemptions

TCS can be totally exempted or fixed at a lower rate under some circumstances.

Total Exemption:

1. No TCS Collection
2. A declaration by the buyer in Form Number 27C (in duplicate) has to be made for total exemption. The declaration is if the goods listed are to be used for the purpose of manufacturing or processing and not trading. A copy of the declaration has to be given to the person collecting tax.
3. The person collecting this declaration form has to submit the copy to the authorities concerned on or before the seventh day of the following month.

7. Lower Rate of TCS

The buyer can apply to the Assessing Officer (AO) for a lower rate, using Form No.13, subject to the condition that the AO is convinced that the total income of the buyer justifies the lower rate. The AO may issue a certificate, specifying the rate of collection.

8. Payment of TCS to the Government

The tax collected is to be paid to the Central Government within one week of the last day of the month in which the tax was collected. This payment is made in any branch of Reserve Bank of India (RBI), State Bank of India (SBI), or any other authorized bank. The payment is made accompanied by income tax challan 281.