- Date : 26/10/2022
- Read: 3 mins
TCS was introduced as a means to track buyers and incentivise them to file their IT returns. Buyers must pay 1% TCS on motor vehicles costing above Rs. 10 lakh, and can deduct the TCS amount from their total tax liability for the year.
TCS or Tax Collected at Source, is the tax that a seller collects from the buyer of a car, the invoice of which exceeds Rs. 10 lakh. The TCS on car purchase is 1% of the final invoice amount. Earlier, TCS was levied on jewellery, bullion, tendu leaves, etc. For example, the sale of bullion exceeding Rs. 2 lakh, and jewellery exceeding Rs. 5 lakh, would attract TCS of 1%. Since 2016, the sale of motor vehicles has also been brought under its ambit.
Also read: TDS vs TCS. Here’s what you need to know
What is TCS?
This is the tax under Section 206C of the Income Tax Act, that is collected by the seller as a means to track buyers and minimise tax evasion. The paid TCS is adjusted with the total tax liability of the buyer, forcing him/her to file their tax returns, while also allowing tax authorities the ability to monitor the person’s disclosed income versus expenses.
The TCS amount paid by the buyer will be reflected in their 26AS statement. If the buyer has no tax liability, then the amount will be credited against his/her PAN. But to claim the amount, the buyer must furnish proof of payment, by way of a TCS certificate, or invoice particular.
How is TCS filed?
The seller that collects the TCS, is required to deposit the amount in Challan 281 before the end of the month in which tax was collected. Failure to do so will attract a monthly interest of 1%.
If the seller is a government body, the tax is deposited on the same day itself. If the tax collector is responsible for collecting the tax amount, he/she is responsible for issuing the TCS certificate to the buyer. Form 27D acts as the TCS certificate and mentions the following:
- Name of buyer and seller
- TAN of the seller
- PAN of the buyer
- Tax collected by the seller
- Date of tax collection
- Tax rate, i.e., 1% in case of motor vehicles
Also read: All You Need To Know About TCS On Foreign Remittance
How to claim TCS return?
When filing your returns online, look for the TCS schedule of the tax return form. The details are auto-filled based on the submitted Form 27D. Simply accept the TCS credit that is due, provided all the details are correct. Amendments can also be carried out, if necessary.
File the return when all the details are verified and correct. Click on 'Validate or calculate tax', and make the necessary prompted corrections.
Do note that if you do not claim the TCS before filing your tax return, it will not be carried forward to the next year. You would then be required to file a revised return to claim the benefit.
This submission is mentioned in Form 26AS. In case of no tax liability the TCS amount will be refunded to the buyer. Otherwise, the amount can be adjusted with the total tax liability for the year.
