TCS return filing

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.

The person collecting tax has to obtain Tax Collection Account Number (TAN) and quote it in all challans, certificates and returns and all other documents pertaining to the transactions. The buyer shall furnish his Permanent Account Number (PAN) to the seller, failing which tax shall be collected at the higher rate (twice or 5 percent whichever is higher).

TCS Due Dates of financial year

QuarterPeriod Due Date of FilingPeriod Due Date of Filing  
1st Quarter1st April to 30th JuneMarch 31st
2nd Quarter1st July to 30th SeptemberMarch 31st
3ed Quarter1st October to 31st DecemberJan 15th
4th Quarter1st January to 31st MarchMay 15th

Form 27EQ – TCS Return

Form 27EQ contains all details pertaining to tax that is collected at source. According to Section 206C of the Income Tax Act 1961, this form must be filed every quarter. The form has to be submitted by both the corporate and government collectors and deductors.

Procedure for TCS return filing in the ITD e-filing portal

  • TCS Statement > Online Filing

Step I:-The data structure (file format) in which the e-TCS return is to be prepared has been notified in https://www.tin-nsdl.com/services/ E-tcs-rpu.html

Step II:-e-TCS return in accordance with the file formats is to be prepared in clean text ASCII format with ‘txt’ as filename extension. e-TCS return can be prepared using Return Preparation Utility provided by NSDL or any other third party software

Step III:-Once the file has been prepared as per the file format, it should be verified using the File Validation Utility (FVU) provided by NSDL

Step IV:-In case file has any errors the FVU will give a report of the errors. Rectify the errors and verify the file again through the FVU.

Step V:-Generated.fvu file can be submitted at TIN-FC or uploaded at https://www.incometax.gov.in/iec/foportal website For Online upload of TCS Statement, registration of organization at https://www.incometax.gov.in/iec/foportal is mandatory.

Tax Collected at Source Exemptions

There are two types of exemptions that includes lower rated TCS and total exemption for tax collected at source:

  • TCS at Lower Rate: The buyer has the provision to apply to the Assessing Officer or AO for collecting the tax at source at a lower rate, with the help of Form 13, under the liable condition that the Assessing Officer has been convinced that the buyer’s total income is justifiable for the lower rate. The Assessing Officer may as well issue a certificate, that has the rate of tax collection at source specified with the lower rate applied.
  • Total Tax Exemption: The buyer has to declare in a Form 27C that he is eligible for total exemption from paying TCS. The declaration has to specify and prove that the goods that have been declared are intended for the purposes of processing and manufacturing and not trading. The person or entity collecting the tax also has to be given a duplicate copy of the declaration form, after which the collector has to submit the declaration form to the appropriate authorities within a week of the day.  

Difference between TDS and TCS

The Government of India collects both direct and indirect taxes to generate revenue for the country. While direct taxes apply to the income that individuals and corporate earn, indirect taxes are imposed on the sale of goods and services. Tax deposition needs to be done by the assessees directly in the former, while the sellers collect and deposit taxes in the latter case.

Tax deducted at source (TDS) and tax collected at source (TCS) are two such taxes levied on individuals that are often confused with each other. Both of these are levied at the point of the origin of income.

FAQs

Qus:- Can TCS be refunded?

It’s not about getting a refund. Let us first clarify that TDS is not a separate levy. It’s similar to an advance tax in that you pay it when you collect it and only demand the refund as you pay the output tax. Just the net tax must be charged if the output tax obligation exceeds the TCS number.

Qus:-  Is the TCS collected on the GST amount?

TCS is obtained on the total selling price, like GST. The CBDT has explained that because the tax is based on the overall revenue consideration, the GST cannot be changed. For eg, if the selling price is Rs 10 lakh plus GST, the TCS must be obtained on that amount without the GST change.

Qus:- Will TCS be collected on the sale of a service?

TCS should not apply to the consideration of a “selling of products.” The Income Tax Act of 1961 does not describe the word “goods.” The word “goods” has a broad meaning. TCS, on the other hand, would not apply to the selling of commodities. However, they are almost certainly liable to TDS under various provisions of the Income Tax Act of 1961.

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