Every person responsible for collection of tax at source (TCS) is required to obtain TAN i.e., Tax Collection Account Number (TAN). It is a 10 digit alphanumeric number (eg-DELM12345L) where first 3 alphabets of this number represent the jurisdiction code (here DEL for Delhi), 4th alphabet is the initial of the name of the TAN holder. The next 5 digits of TAN are system generated numbers between 00001 to 99999 and last character, i.e., the tenth character is an alphabetic check digit.
TAN is relevant to TCS because it is mandatory to quote TAN in TCS statements i.e. return, Challans for payment of TCS, TCS certificates and any other documents as may be prescribed.
Due date for TCS
For deposit of TCS to the credit of Central Government tax collected at source must be in accordance with the following provisions:
A) In case tax is collected by an office of the Government:
• When tax is paid without production of an income-tax challan, on the same day when tax is collected.
• When payment of tax is accompanied by an income-tax challan, on or before 7 days from the end of the month in which tax is collected.
B) In case tax is collected by non-government persons, within one week from the last day of the month in which tax is collected.
Provisions and consequences for defaulters in payment of TCS
These consequences will be faced by a person if he fails to collect TCS or fails to deposit it to the credit of Central Government’s account:
1. Imposition of interest: He shall be liable to pay simple interest at the rate of 1% per month.
2. Imposition of Penalty: Person will be liable to pay by way of penalty a sum equal to the amount of tax which such person failed to collect.
3. Prosecution: He will be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.
There are 4 categories or rats in TCS
Every person, being a seller, shall at the time of debiting the amount payable by the buyer collect from the buyer of any goods of the nature a sum equal to the percentage of such amount as income-tax at:
Alcoholic liquor for human consumption (1%), Tendu leaves (5%), Timber (2.5%), other forest produce except timber/tendu leaves (2.5%), Scrap (%1), Minerals being coal or lignite or iron ore (1%)
Every person, who grants a lease or a licence or enters into a contract or otherwise transfers any right or interest whole or partial at the time of receipt of amount from the licensee or lessee is taxed at: Parking lot (2%), Toll plaza (2%), Mining and Quarrying (2%)
Every seller, who receives any amount in cash in exchange for sale of bullion or jewellery or any other goods (other than bullion or jewellery) or for any service, at the time of receipt of such amount in cash must collect from the buyer, a sum equal to 1 % of sale consideration as income-tax, if such consideration,—
• for bullion, exceeds Rs. 2,00,000; or
• for jewellery, exceeds Rs. 5,00,000; or
• for any goods, other than those referred to above, or any service, exceeds Rs. 2,00,000.
Every seller, who receives any amount in exchange for sale of a motor vehicle of the value exceeding Rs. 10,00,000, at the time of receipt of such amount must collect a sum equal to 1% of the sale consideration as income-tax from the buyer.
Every person responsible for collection of tax at source is required to file quarterly statements of return. Quarterly TCS statements can be filed in Form No. 27EQ
The quarterly TCS statement must be filed electronically by filing the statement electronically under digital signature; or filing the statement electronically along with the verification of the statement in Form 27A or verified through an electronic process.