TCS Compliance — Section 206C (Form 27EQ & 27D)

Section 206C — Income-tax Act, 1961
The parent section for all TCS obligations. Sub-sections:

• 206C(1): Traditional items (liquor, forest produce, scrap, minerals, parking, toll, mine/quarry)


• 206C(1F): Motor vehicles above ₹10 lakh — inserted by Finance Act 2016


• 206C(1G): LRS remittances and overseas tour packages — inserted by Finance Act 2020, enhanced to 20% by Finance Act 2023 (effective 1 Oct 2023)


• 206C(1H): Sale of goods above ₹50 lakh — inserted by Finance Act 2020 (effective 1 Oct 2020)

Section 206CCA — Higher TCS rate for non-filers
If the collectee has not filed ITR for the two preceding assessment years (and TCS/TDS exceeded ₹50,000 in each year), TCS is collected at twice the applicable rate or 5%, whichever is higher.

Rule 31D — Form 27EQ (quarterly TCS return)
Quarterly statement of tax collected at source, due 15 days after the end of each quarter.

Section 203 / Rule 31AA — Form 27D
TCS certificate issued by collector to collectee within 15 days from the due date of filing Form 27EQ.

Section 234E — Late filing fee
₹200 per day for delay in filing Form 27EQ, from the due date until the date of filing.

Section 206C(7) — Interest
Interest at 1% per month for delay in depositing TCS collected.

---
ITA 2025 Concordance (in force 1 April 2026)
Section 206C [ITA 1961] → Sections 390, 394 [ITA 2025] (§390: obligation to collect TCS; §394: TCS on specified transactions including goods sale, LRS, motor vehicles)
Section 234E [ITA 1961] → Section 427 [ITA 2025]
Section 206C(7) interest → within Section 394 [ITA 2025]
Transition note: AY 2026-27 runs under ITA 1961 per Section 536(2) repeal-and-savings. ITA 2025 sections apply to tax year 2026-27 onward.
Section 206C(7) interest / consequences [ITA 1961] → Section 398 [ITA 2025] (consolidated provision for failure to collect or pay TCS)

Tax Collected at Source (TCS) is collected by the seller at the point of sale — not deducted by the buyer. TCS under Section 206C is a separate compliance stream from TDS that many sellers and businesses overlook until an AIS discrepancy triggers scrutiny.

The four most commercially significant TCS provisions:

1. Section 206C(1H) — Sale of goods above ₹50 lakh (effective 1 Oct 2020)
Every seller whose turnover exceeded ₹10 crore in the preceding year must collect TCS at 0.1% on the amount received from a buyer that exceeds ₹50 lakh cumulative in the financial year. TCS is collected on receipts (cash collected), not on invoices. If the buyer deducts TDS on the same transaction under Section 194Q, TCS is not additionally required.

2. Section 206C(1G) — LRS and overseas tour packages (enhanced effective 1 Oct 2023)

• Overseas remittance under LRS for purposes other than education or medical: 20% TCS on amount above ₹7 lakh


• LRS for education (funded by loan): 0.5% TCS; for education (own funds): 5% TCS


• Overseas tour packages sold by tour operators: 20% TCS on full package value (no threshold)

3. Section 206C(1F) — Motor vehicle sale above ₹10 lakh
Dealers selling motor vehicles for more than ₹10 lakh must collect 1% TCS at the time of receipt of sale consideration.

4. Section 206C(1) — Traditional TCS items
Alcoholic liquor, tendu leaves, timber, forest produce, scrap, minerals, parking lots, toll plazas, mine/quarry — rates ranging from 1% to 5%.

Quarterly compliance — Form 27EQ:
TCS is filed as a quarterly return in Form 27EQ. Due dates: Q1 — 15 July; Q2 — 15 October; Q3 — 15 January; Q4 — 15 May.

Form 27D: TCS certificate issued by the collector to the collectee after each quarter, generated from TRACES. The collectee uses it to claim TCS credit in their ITR.