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Tax Collection at Source Research Team | Posted On Friday, May 01,2009, 01:32 PM

Tax Collection at Source



What is TCS (Tax Collected At Source)?

Tax collection at source arises on the part of the seller of goods. Tax is collected at the base of income itself. It is to be collected at source from the buyer by the seller at the point of sale. Such tax collection is to be made by the seller at the time of debiting the amount payable to the buyer to the account of the buyer or at the time of receipt of such amount from the buyer whichever is earlier. A person collecting tax shall furnish a certificate specifying whether tax has been collected or not, what sum has been collected the rate of tax applied on it and other such particulars as may be arranged. It shall be furnished within 10 days from the date of debit or receipt of the amount furnished to the buyer to whose account such amount is debited or from whom such payment is received. The taxes composed must be remitted into the income tax department's account. Every person collecting tax shall within such time as may be prescribed apply to the Assessing officer for the allotment of a tax-collection account number.

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In other words, TCS means a collection of tax at source by the seller or collector from the purchaser of the goods. As arranged under Income Tax Act 1961 it is compulsory on the part of the buyer to pay a predetermined value of TCS to the seller, while purchasing a particular commodity. TCS is generally set for business or trade-in alcoholic liquor, forest produce, scarp, etc. Various lease, license, and contracts related to areas like a parking lot, mines and toll plaza also fall under the umbrella of TCS in India.

See Also: All You Must Know About Tax Planning

TCS is generally collected when amassed or when paid, whichever is earlier. The seller or collector who collects the tax is required to deposit it in any of the designated branches of the certified banks. Tax Collection at Source is implemented to curb tax evasion and also to facilitate proper tax collection in India.  

The Following Goods When Sold Must Be Subjected to Tax Collection at Source

  • Alcoholic liquor for human consumption (other than Indian made foreign liquor)
  • Timber obtained under a forest lease
  • Timber obtained by any mode other than under a forest lease
  • Any other forest produces not being timber.

See Also: Last Minute Tax Planning: What You Should Do?

The rates of various goods which comes under the policy of TCS are listed below

Nature of Goods

Percentage or Rate of Tax

Alcoholic  liquor


Timber obtained under a forest lease


The Tiber obtained without forest lease


Tendu Leaves


Other forests produce, excluding Tendu leaves and Timber




See Also: All You Must Know About Tax Planning

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