As per norms u/s 206C of the Income Tax Act 1961, it is a prime requirement for a certain category of sellers to collect TCS from a certain category of buyers at the rates prescribed by the government. On failure to collect the TCS from specified buyers, the sellers are liable to pay a huge sum as penalties (as valid u/s 271CA of the Income Tax Act).
To rescue the sellers from paying uninvited penalties, the write-up here covers the provisions of section 271CA under which the terms of TCS collections, its due dates and penalties are mentioned.
Provisions of Section 271CA Under the IT Act
Penalty Provisions
As per the provisions of penalty mentioned under section 271CA, the person liable to pay the penalty is the one who fails to collect tax at the source or TCS. penalties are eligible to be imposed only after approval from the Joint Commissioner. However, if the defaulter is able to justify his/her reason for not collecting the tax at source and the same is approved by the authorization, then the person is immune from the levy of the said penalties (as mentioned u/s 273B of the Income Tax Act 1961.
Time Period for TCS Collection
The penalty is said to incur in case the seller fails to collect the tax from the purchaser, so here is the time period within which the seller must collect the TCS. The time limit could not be ignored if one wishes to escape from the penalty levy on TCS collection.
Specified u/s 206C (1) the Seller Must Collect the TCS When:
- He is debiting the payable amount to the account of the buyer.
- The amount is received from the buyer either via Cash, Cheque, Draft or any other mode.
Ways to Avoid Penalties Leviable on TCS
If the seller wishes to avoid the penalties on TCS (valid u/s 271CA) then he is required to collect the accurate amount of tax (TCS) from the buyer before the expiry of the below-mentioned time period:
- Date of debiting the account of the buyer.
- The date of receiving the payable amount from the buyer via any mode Cash/cheque/draft or others.
Read Also: Section 194I, 194IB & 194IC for TDS Under Income Tax Act
In case the seller is successful in justifying the cause of not collecting the tax or delay in collecting the tax (TCS) and the same is accepted by the authorities then he is no longer subjected to penalties (as mentioned u/s 271CA).
Amount of Penalty
The maximum amount of penalty levied on the defaulter could reach up to the sum equal to the amount of said TCS.
