Tax Collected at Source (TCS) – An Insight

Tax Collected at Source (TCS) – An Insight
Hyderabad, India

Tax Collected at Source or simply, TCS is a system of mandatory advance collection of tax by a seller of specified goods, from his buyer at the time of receipt of sale consideration or accrual in the books whichever is earlier. TCS has been introduced to curb defaults in payment of income tax just like the concept of TDS, albeit a lot simpler.


TCS applies to those,

  1. Who deals with the specified set of goods as per section 206 of ITA 1965, and
  2. Bought the specified goods for trading purposes,


and applies to those


  1. Sellers who have made a turnover of INR 10 crores or more in the last FY, and
  2. Buyers who have made an aggregate purchase of INR 50 lacs or more in the current FY.


Now, once the seller falls in the ambit of TCS, he/it shall have to apply for a TAN or Tax deduction or collection Account Number in the Form 49B here. TAN is required to be quoted on TCS returns and challans. Further, failure of applying for TAN shall be attract a penalty of INR 10,000 under section 234E.


As mentioned earlier, TCS shall be collected at the time of receiving the sale consideration or accrual in the books whichever is earlier and shall be calculated as a % of sale consideration exceeding INR 50 lacs.


TCS shall be collected on [Taxable amount = sale consideration – INR 50 lacs]. Sale consideration includes GST amount as well.


There shall also be a surcharge levied additional to the basic TCS based on the legal status of the buyer and the transaction amount.


Further details are provided in the full article on website under blog section. CEAAR is a tax compliance enabled invoicing and accounting application to enable the companies and professionals to handle the taxes like GST, TDS, TCS and payroll taxes with ease, comfort and confidence. Please visit to know more.



Tax Specialist

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