TAX COLLECTED AT SOURCE�AND�ADVANCE TAX

SUBMITTED BY

MEENU KOHLI

ASSOCIATE PROF. IN COMMERCE

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WHAT IS TAX COLLECTED AT SOURCE (TCS)?

• Tax Collected at Source (TCS) is a tax payable by a seller which he collects from the buyer at the time of sale of goods.
• Section 206 of the Income Tax Act mentions the list of goods on which the seller should collect tax from buyers.

SECTION – 206C : PROFITS AND GAINS FROM THE BUSINESS OF TRADING IN ALCOHOLIC LIQUOR, FOREST PRODUCE, SCRAP, ETC.�

• 206C. 24(1) Every person, being a seller shall,
• at the time of debiting of the amount payable by the buyer to the account of the buyer or
• at the time of receipt of such amount from the said buyer in cash or
• by the issue of a cheque or draft or by any other mode,
• whichever is earlier,
• collect from the buyer of any goods of the nature specified in column (2) of the Table below, a sum equal to the percentage, specified in the corresponding entry in column (3) of the said Table, of such amount as income-tax

NO COLLECTION OF TAX IF DECLARATION IS SUBMITTED BY A RESIDENT BUYER [ SECTION (206(1A)]

According to section 206C (1), no collection of tax shall be made in the case of a buyer, who is resident in India,

if such buyer furnishes to the person responsible for collecting tax, a declaration in writing in duplicate in the prescribed form (Form No. 27C) and verified that the goods are to be utilised for the purposes of manufacturing, processing or producing articles or things or for the purpose of generation of power and not for trading purposes.

• The person responsible for collecting tax under this section shall deliver or cause to be delivered to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner one copy of the declaration referred to in section 206C( IA) on or before the seventh day of the month next following the month in which the declaration is furnished to him

COLLECTION OF TAX BY A PERSON WHO GRANTS LEASE OR LICENSE, RIGHTS ETC.[SECTION 206(1C)]

• Every person, who grants a lease or a license or enters into a contract or otherwise transfers any right or interest either in whole or in part in any parking lot or toll plaza or mine or quarry, to another person, other than a public sector company (hereafter in this section referred to as “licensee or lessee”) for the use of such parking lot or toll plaza or mine or quarry for the purpose of business shall,
• at the time of debiting of the amount payable by the licensee or lessee to the account of the licensee or lessee or
• at the time of receipt of such amount from the licensee or lessee in case or
• by the issue of a cheque or draft or by any other mode, whichever is earlier,
• collect from the licensee or lessee of any such license a sum equal to the percentage
• ( shown in next slide)of such amount as income-tax

TCS ON SALE OF MOTOR VEHICLE EXCEEDING THE VALUE OF RS. 10,00,000 [SECTION 206C(1F)]

• 1F)Every person, being a seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding Rs. 10 Lakh, shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 1% of the sale consideration as income-tax.
• (2) The power to recover tax by collection under sub-section (1) or sub-section (1C) 29 shall be without prejudice to any other mode of recovery.
• 3)Any person collecting any amount under sub-section (1) or sub-section (1C) 29 shall pay within the prescribed time the amount so collected to the credit of the Central Government or as the Board directs :�

ADVANCE PAYMENT OF TAX

• Advance payment of tax is another method of collection of tax by the Central Government in the form of pre-paid taxes. Such advance tax is in addition to deduction of tax at source or collection of tax at source. Scheme of advance payment of tax is also known as 'Pay as you Earn' scheme i.e., an assessee is required to pay tax in a particular financial year.

CONDITIONS OF LIABILITY TO PAY ADVANCE TAX [SECTION 208]

• Advance Tax, as computed in accordance with the provisions of this Chapter, shall be payable during a financial year, only when the amount of such advance tax payable by the assessee during that year is Rs.10,000 or more. Such an SSC may be individual HUF form AOP/BOI or company etc.

SENIOR CITIZEN NOT REQUIRED TO PAY ADVANCE TAX [SECTION 207(2)]�

• The provisions of advance tax shall not apply to an individual resident in India, who–
• does not have any income chargeable under the head “Profits and gains of business or profession”; and
• is of the age of sixty years (60 years) or more at any time during the previous year.

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ASSESSEE HAVING AGRICULTURE INCOME [SECTION 209(2)]

• For calculation of advance tax the agriculture income shall be integrated with current income if the finance act of such financial year so provides.

FOR ALL ASSESSEES CORPORATE AS WELL AS NON- CORPORATE ASSESSEE( OTHER THAN THE ASSESSEES REFERRED IN THE CLAUSE B [SECTION 211(1)(A)

All the assessees, other than the assessee referred to in clause (b) of section 211(1) who are liable to pay the advance tax shall pay the same, in four installments during each financial year and the due date of each installment and the amount of such installment shall be as specified in the Table below:

B. ASSESSEE COVERED U/S 44AD OR U/ 44ADA TO PAY ADVANCE TAX IN ONE INSTALLMENT [SECTION 211(1)(B)]

• All Assessee covered under Section 44AD or under Section 44ADA shall be required to pay advance tax of the whole amount in one installment on or before the 15^th March of the financial year.

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SECTION 234 A – INTEREST FOR DEFAULTS IN FURNISHING RETURN OF INCOME��

Interest under section 234A is levied for delay in filing the return of income. Interest is levied at 1% per month or part of a month. Example-The due date of filing the return of income is 31st July, 2021, and return of income is filed on 9th January, 2022 i.e. after the due and hence, will be liable to pay interest under section 234A.��

DEFAULT IN PAYMENT OF ADVANCE TAX [SEC. 234B] -

• Interest is payable if an assessee who is liable to pay advance tax, has failed to pay such tax. It is also payable if an assessee has paid advance tax but the amount of advance tax paid by him is less than 90 per cent of assesseed tax.� Rate of interest –�Interest is payable on short-term or non-payment at the rate of 1% p.m. (per month.
• Period for which interest is payable -�From April 1 of the assessment year to the date of determination of income under section 143(1) or where regular assessment is made to the date of regular assessment.

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SECTION 234 C-INTEREST FOR DEFERMENT OF ADVANCE TAX.

• Section 234C provides for levy of interest for default in payment of instalment(s) of advance tax i.e. In case of taxpayers (other than those who opted for presumptive taxation scheme under section 44AD or section 44ADA), interest shall be levied-��

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