Section 206C - TCS on Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc [ Section 206C(1) to (1F) ] - Income Tax - Ready Reckoner - Income Tax

TCS on Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc - [ Section 206C (1) to (1F) Read with Rule 31AA ] Section 206C(1) : Profit and Gains from Business of trading in alcoholic liquor, forest produce, scrap, etc. Every person, being a seller shall at the time of debiting 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, whichever is earlier, collect from the buyer, a sum equal to the following percentage of the purchase price, as income-tax. S.No Nature of goods Percentage rate of tax collection at source of Purchase Price 1. Alcoholic liquor for human consumption 1% 2. Tendu Leaves 5% 3. Timber obtained under a forest lease 2.5% 4. Timber obtained by any mode other than under a forest lease 2.5% 5. Any other forest produce not being timber or tendu leaves 2.5% 6. Scrap 1% 7. Mineral being coal or Lignite or Iron Ore 1% No surcharge, education cess or or SHEC shall be added to the above rates. Hence tax will be collected at source at the basic rate. Meaning of scrap:- Scrap means waste or scrap from the manufacture or mechanical working of materials which is definitely not usable as such because of breakage, cutting up, wear and other reasons. Non-applicability of section 206C(1) Self declaration by buyer if relevant goods are purchased for manufacturing or producing any articles or things [ Section 206C(1A) Rule 37C ] No collection of tax shall be made in the case of a resident buyer, 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 in the prescribed manner to the effect that the goods referred to in column (2) of the aforesaid Table are to be utilised for the purposes of manufacturing, processing or producing articles or things, or for the purposes of generation of power and not for trading purposes. Declaration furnished u/s 206C(1A) to be delivered to the Principal Chief Commissioner [ Section 206C(1B) ] 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 sub-section (1A) on or before the seventh day of the month next following the month in which the declaration is furnished to him. Every person, who grants a lease or a licence or enters into a contract or otherwise transfers for parking lot or toll plaza or mine or quarry Section 206C(1C) Any right or interest in any parking lot or toll plaza or mine or quarry to another person, other than a public sector company (herein after called as Licencee or Lessee ) for the use of such parking lot or toll plaza or mine or quarry for the purposes of business shall, at the time of debiting of the amount payable by the licencee or lessee to the account of the licencee or lessee or at the time of receipt of such amount from the licencee or lessee, whichever is earlier, collect from the licencee or lessee 2% of such amount as Income-Tax. SECTION 206C(1D):- [Omitted by FA, 2017,w.e.f. 1-4-2017 ] SECTION 206C(1E):- [Omitted by FA, 2017,w.e.f. 1-4-2017 ] TCS on sale of motor vehicle exceeding the value of Rs. 10,00,000 Section 206C(1F) From 01.01.2025 - Every person, being a seller, who receives any amount as consideration for sale of - (i) a motor vehicle; or (ii) any other goods, as may be specified by the Central Government by notification in the Official Gazette, of the value exceeding ten lakh rupees, 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. Upto 31.12.2024 - Every person, being a seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding Rs.10,00,000, 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. Exception of Section 206C(1F) The Central Government hereby specifies that no collection of tax shall be made under section 206C(1F) of the said Act on any payment received from the Reserve Bank of India. [ Notification 115/2024 dated 16.10.2024 ] Important Notifications Circulars The board has clarified the issue regarding the applicability of provisions related to the levy of TCS (Tax Collected at Source) when the sale consideration is received partly in cash and partly in cheque. This clarification has been issued through an addendum to the circular, presented in the form of a question and answer. [ Circular No. 22/2016 dated 08.06.2016 Circular No. 23/2016 Dated 24.06.2016 ] Note: The buyer shall get credit of TCS collected by seller. No TCS has to be collected where: (i) Buyer is a public sector company (ii) Buyer is a Central Govt., State Govt. (iii) Buyer is a club (iv) Buyer is embassy, High commission, Consulate or trade representative of a foreign state. (v) Buyer buys the above goods for his personal consumption. Important Notifications Circulars Various clarification has been issued regarding collection of income-tax at source under section 206C of the Income-tax Act, in respect of profits and gains from the business of trading in alcoholic liquor, forest produce, etc. Clarification I [ Circular No. 525, dated 24-11-1988 ] Clarification II [ Circular No. 535, dated 26-6-1989 ] Clarification III [ Circular No. 565, dated 11-7-1990 ] Clarification IV [ Circular No. 585, dated 27-11-1990 ] Clarification V [ Circular No. 620, dated 6-12-1991 ] Clarification VI [ Circular No. 634, dated 20-8-1992 ] Clarification VII [ Circular No. 660, dated 15-9-1993 ]