LET’S TALK ABOUT TAX COLLECTED AT SOURCE

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-CA Ridhi Dhoot

Tax collected at source

LET’S TALK ABOUT TAX COLLECTED AT SOURCE


ridhhi dhoot

About Author :

Name:  CA Ridhi Dhoot

Author is a Chartered Accountant from Nagpur. She is in to  Tax Consultancy & Teaching profession.

 


Not just TDS, the massive Income Tax also includes TCS within its ambit. It is important to know the various aspects of TCS like its rates, commodities on which it is applicable, etc. So let us make an attempt to understand TCS, TCS vis a vis TDS and further details about TCS.

Basic Difference between TDS & TCS:

Tax Deducted at Source Tax Collected at Source
Generally,  tax  is  required  to be deducted at the  time  of  payment or at the time of credit  to the  account  of  the  payee, whichever is earlier. Generally, tax is required to be collected at the source at the time of receipt of such amount from the said buyer or at the time of debiting the amount payable by the buyer of certain goods to the account of the buyer, whichever is earlier.

Rates of Tax Collected at Source:

Sr. No. Particulars

 

Rate
1. Alcoholic liquor for human  consumption 1%
2. Tendu Leaves 5%
3. Scrap 1%
4. Minerals 1%
5. Timber obtained under a forest  lease 2.5%
6. Timber obtained by any mode other than above 2.5%
7. Any Other Forest Products other than timber or Tendu leaves 2.5%
8. Packing lot, toll plaza, mining & quarrying 1%
9. Other Service/goods: Sale consideration received in cash exceeding Rs. 2,00,000/- 1%
10. Motor Vehicle : Sale consideration received in cash exceeding Rs. 10,00,000/- 1%

 

Important Points to be taken note of:

  1. No collection of tax shall be made in the case of a resident buyer, if such buyer had furnished to the person responsible for collecting the tax, a declaration in writing in double copies in the prescribed format and the same has been verified in the prescribed way to the effect that the goods referred above are to be utilized further for the purpose of manufacturing, processing or producing articles or manufacturing things or for the purpose of generation of power and should not be used for the purpose of trading.
  2. Section 206C (1D) provides that tax is to be collected at source@1% of sale consideration by the seller from the purchaser, where the sale of jewellery or bullion is in cash and the sale consideration is as follows–
    1. For jewellery, the consideration exceeds Rs. 5 lakh,
    2. & for bullion, the consideration exceeds Rs. 2 lakh
In these cases, the tax has to be collected at source by the seller from the purchaser irrespective of the purpose of the goods, even if it is for further manufacturing or trading or for personal use.
The impetus for bringing such restrictions is to reduce the quantum of cash transactions in jewellery and bullion sector and also to make sure that the flow of unaccounted money is reduced in this sector.
A person who is collecting tax as per the provisions of this section is responsible for preparing such statements and for such periods as may be required after paying the tax collected from the purchasers to the credit of the Central Government within the stated time frame.
These statements should be submitted to the prescribed income-tax authority or the person authorized by the income – tax authority. The statement should be in the prescribed format and should be cross – verified in the required manner. The statement should also set forth the require particulars and should be file within the stipulated time limits.

This was a brief summary to help readers get a crux of various aspects of what Tax Deducted at Source is!


Disclaimer: Author of this write up intends to impart the knowledge of the amendment made by the Government regulatory and step taken to ease the compliance. Author is nowhere liable for any damage or indirectly and it is advisable to the viewers to consult their professional expertise to seek the advice.  

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