Section 206C — TCS on Sale of Goods, Motor Vehicles and Alcohol

Tax Collected at Source (TCS) under Section 206C requires certain sellers to collect tax from the buyer at the time of sale — and remit it to the government. TCS is not a final tax; it is a credit in the buyer's hands (claimable in ITR or adjusted against tax liability). Here is the complete guide to Section 206C TCS provisions.

TCS on Specified Goods — Section 206C(1)

• Alcoholic liquor for human consumption: TCS at 1%
• Timber obtained under a forest lease: TCS at 2.5%
• Timber obtained by any other mode: TCS at 2.5%
• Any other forest produce (other than timber/tendu leaves): TCS at 2.5%
• Scrap: TCS at 1%
• Minerals (coal, lignite, iron ore): TCS at 1%
• Tendu leaves: TCS at 5%
• Parking lot, toll plaza, mining and quarrying: TCS at 2%

TCS on Motor Vehicles — Section 206C(1F)

• Applicable when a motor vehicle is sold for a value exceeding ₹10 lakh
• TCS rate: 1% of the sale price
• Collected by the dealer at the time of sale — buyer's TCS certificate issued
• The buyer (individual) can claim TCS credit in ITR or get a refund if excess TDS/TCS

Section 206C(1H) — TCS on Sale of Any Goods Above ₹50 Lakh

• Applicable to: Sellers with turnover above ₹10 crore in the preceding financial year
• TCS rate: 0.1% on sale consideration received from a buyer exceeding ₹50 lakh in a financial year
• Not applicable to: Transactions where TDS is already deducted by the buyer under Section 194Q (both provisions have similar scope — they do not apply simultaneously)
• Exception: Exports of goods — TCS under 206C(1H) does not apply on export sales

TCS Compliance

• TCS must be collected at the time of debiting the buyer or receipt of amount — whichever is earlier
• Deposit TCS by 7th of the following month (same as TDS deposit)
• File TCS return in Form 27EQ quarterly
• Issue TCS certificate in Form 27D to the buyer

Conclusion

Section 206C TCS spans from alcohol and scrap to all goods sales by large sellers — requiring systematic buyer-wise tracking and quarterly return filing. SPOTON provides complete TCS compliance including 206C(1H) threshold monitoring and Form 27EQ filing for businesses across Kerala. Contact us for expert TCS compliance services.