As per section 306C of Income Tax Act, every person being a seller, at the time of collecting the amount payable by the buyer, collect from the buyer of the goods(of specified nature) a sum equal to the percentage (specified below) of such amount as Income Tax.

Below mentioned is the list of specified goods along with tax rate on which tax is collected by the seller of goods or services:

Type of goods/ services Rates
Alcoholic Liquor for human consumption 1%
Tendu leaves 5%
Timber obtained under Forest lease 2.5%
Timber obtained by any mode other than under a forest lease 2.5%
Any other forest produce not being timber or tendu leaves 2.5%
Scrap 1%
Minerals, being coal or lignite or iron ore 1%
Parking lot 2%
Toll Plaza 2%
Mining and quarrying 2%

When a seller receives any amount of consideration for a sale of motor vehicle of value exceeding Rs. 10lakhs, shall at the time of receipt of such sum, collect from the buyer and amount equal to 1% of the sale consideration as Income tax.

No collection of tax shall be made in following 2 conditions are satisfied:

  1. Buyer is resident in India
  2. He/she furnishes to the seller, a declaration in writing and verified in the prescribed manner that the goods specified above are to be utilized for the purpose of manufacturing, processing or producing articles or things or for the purpose of generation of power and not for trading purposes.

The seller shall deliver this declaration to the principle Chief Commissioner or Chief Commissioner of Commissioner on or before 7th day of the month next following month in which the declaration is furnished to him.

Due Dates for payment or filing return-

Collection month Quarter ending Due date of payment Due date of filing return
April 30th June 7th May 15th July
May 7th June
June 7th July
July 30th September 7th August 15th October
August 7th September
September 7th October
October 31st December 7th November 15th January
November 7th December
December 7th January
January 31st March 7th February 15th March
February 7th March
March 7th April

Quarterly Return:

TCS return is quarterly filed in Form No. 27EQ.

When the tax collector files his quarterly return in Form No. 27EQ, he has to provide TCS certificate to the purchaser of goods.  Form 27D is the certificate issued for TCS returns filed. This certificate contains the following details:

  1. Name of the Seller and Buyer
  2. TAN of the seller i.e. who is filing the TCS return quarterly
  3. PAN of both seller and buyer
  4. Total tax collected by the seller
  5. Date of collection
  6. The rate of Tax applied

This certificate has to be issued within 15 days of return filing.  Due dates for issuing certificates are:

Quarter Ending Date for generating Form 27D
For the quarter ending on 30th June 15th August
For the quarter ending on 30th September 15th November
For the quarter ending on 30th December 15th February
For the quarter ending on 30th March 15th June

TCS Exemptions:

In the following two cases, no tax is to be collected by the seller of goods/ services-

  1. When the eligible goods are used for personal consumption
  2. The purchaser buys the goods for manufacturing, processing or production and not for the purpose of trading of those goods.

Other points:

  1. If the tax collector responsible for collecting the tax and depositing the same to the government does not collect the tax or after collecting doesn’t pay it to the government as per above due dates, then he will be liable to pay interest of 1% per month or a part of the month.
  1. If the AO considers that the TCS return filed is defective, he may intimate the defect to the person collecting tax and give him an opportunity to rectify the defect within a period of 15 days from the date of intimation. If the collector of tax fails to rectify the return within the given time period, the return will be considered invalid.
  1. If the person responsible for collection of tax, fails to collect the whole or part of the amount received from the buyer, he/she shall not be considered Assessed in default if –
  2. He has furnished his return in income u/s 139 of Income Tax Act
  3. He has taken into consideration such amount for computing his income
  4. He has paid tax due on his income declared by him.

TCS under Goods and Service Tax (GST):

 Following provisions are related to GST-

  1. Any dealer or traders selling goods online would get the payment from the online platform after deducting an amount tax @ 1 % under IGST Act. (0.5% in CGST & 0.5% in SGST).
  2. The tax would have to be deposited to the government by 10th of the next month.
  3. All the dealers/traders are required to get registered under GST compulsorily.

 These provisions are effective from 1st Oct 2018.



-Juhi Ganatra


 (Article Assistant)