Tax Collected at Source (TCS) is a mechanism implemented by the Indian government to ensure timely collection of taxes from specific transactions involving the sale of goods or services. Sellers are obligated to collect TCS from buyers at the point of sale, and failure to comply can result in significant penalties.
Penalty for Non-Collection of TCS
According to Section 271CA of the Income Tax Act, 1961, individuals who fail to collect TCS are liable to pay a penalty equal to the amount of tax that should have been collected. This penalty is imposed by the Joint Commissioner of Income Tax.
Avoiding the Penalty
To avoid the penalty for non-collection of TCS, sellers must adhere to the following guidelines:
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Collect TCS within the prescribed timeframe: TCS must be collected within the earlier of the following dates:
- Date of debiting the buyer’s account
- Date of receiving payment from the buyer
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Maintain proper records: Sellers must maintain accurate records of all TCS transactions, including the amount collected, the date of collection, and the PAN of the buyer.
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File quarterly TCS returns: Sellers are required to file quarterly TCS returns (Form 27EQ) with the Income Tax Department.
Interest on Late Payment
In addition to the penalty, sellers who fail to collect or deposit TCS on time may also be charged interest on the outstanding amount. The interest rate is 1% per month.
Reasonable Cause Exemption
In certain cases, the penalty for non-collection of TCS may be waived if the seller can prove that there was a reasonable cause for the failure. The onus of proving reasonable cause lies with the seller.
Failing to collect TCS can have serious financial consequences for sellers. To avoid penalties and interest charges, sellers must ensure that they comply with all TCS regulations, including timely collection, record-keeping, and return filing.
Failed to deduct TDS or collect TCS then What to do ? Solution is Form 26A & Form 27BA. tds fail
FAQ
What is the penalty for not deducting TCS?
What is the TCS rate if return is not filed?
Can TCS be recovered?
How do I claim back TCS?
What happens if TCS is not collected or paid?
The seller may face penalties per the Income Tax Act, 1961 provisions if TCS is not collected or paid. The penalties could include interest on the amount not collected or paid and a fine. 5.
How TCS is collected?
Every seller of specified goods shall collect TCS from the buyer of the goods. TCS will be collected: At the time of receipt of such amount from the buyer, whichever is earlier. TCS tax is collected under Section 206C of Income Tax Act. Below is the list of specific goods on which TCS is applicable along with TCS Rates:
What does TCS mean in income tax?
The Income Tax Act, 1961 lists down all the provisions for TCS, let’s discover here. TCS full form stands for Tax Collected at Source. The purchaser is responsible for paying the TCS bill, which is collected from the lessee or buyer. Although it is the responsibility of the buyer to pay TCS, the seller is equally liable to collect the TCS duly.
What are the penalty provisions related to tax collected at source (TCS)?
The penalty provisions related to Tax Collected at Source (TCS) under the Indian Income Tax Act, Here’s a breakdown of the consequences for not adhering to the TCS regulations: Interest for Delayed Payment (under Section 220 (2) of the Income Tax Act)