S. 206C of the Income Tax Act, 1961 (‘Act’ for short) deals with the tax collected at source. S. 206CA of the Act deals with the obtaining of tax collection account number. Every person collecting tax as per the provisions of 206C shall apply for a Tax collection account number to the Assessing officer. After the allotment of such number, the Assessee shall quote the number in all the challans used for payment, all the return delivered, in all the certificates furnished u/s 206C, etc.
If a person fails to comply with the provisions of S. 206CA, then he shall be liable to penalty of Ten thousand rupees u/s 272BBB.
The following are the rules dealing with the tax collected at source:
Rule 31AA – Statement of collection of tax under proviso to Section 206C (3);
Rule 37C – Declaration by a buyer for no collection of tax at source under Section 206C(1A);
Rule 37CA – Time and mode of payment to Government account of tax collected at source under Section 206C;
Rule 37D – Certificate of tax collected at source under Section 206C(5);
Rule 37E – Prescribed returns regarding tax collected at source under Section206C (5A);
Rule 37EA – Returns regarding tax collected at source on computer media under Section 206C (5B);
Rule 37F – Prescribed authority for purposes of Section 206C(5A);
Rule 37G – Application for certificate for collection of tax at lower rates under Section 206C(9);
Rule 37H – Certificate for collection of tax at lower rates from buyer under Section 206C(9);
Rule 37-I – Credit for tax collected at source for the purpose of Section 206C(4);
Rule 114AA – Application for allotment of a tax collection account number.
TAX COLLECTION AT SOURCE:
S. 206C prescribes three types of categories for tax collection at source. According to S. 206C(1) every person, being a seller shall, at the time of receipt of amount from the buyer in cash or by cheque or draft or by any other mode, collect from the buyer of any goods of the nature specified in the table below, a sum of equal to the percentage specified in the table of such amount as income tax.
The nature of goods covered u/s 206C is:
| Sl No. | Nature of goods | Percentage of TCS | |
| (i) | Alcoholic Liquor for human consumption | One per cent | |
| (ii) | Tendu leaves | Five per cent | |
| (iii) | Timber obtained under a forest lease | Two and one-half per cent | |
| (iv) | Timber obtained by any mode other than under a forest lease | Two and one-half per cent | |
| (v) | Any other forest produce not being timber or tendu leaves | Two and one-half per cent | |
| (vi) | Scrap | One per cent | |
| (vii) | Bullion if consideration exceeds Rs. 2 Lakhs or jewellery, if consideration exceeds Rs. 5 Lakhs (and applicable if amount is received in cash {from 1st July 2012} SEC 206C (1D) | One per cent | |
Reference:
Insertion of new section 206CA.
After section 206C of the Income-tax Act, the following section shall be inserted with effect from the 1st day of June, 2002, namely:—
“206CA. Tax-collection account number.— (1) Every person collecting tax in accordance with the provisions of section 206C, shall, within such time as may be prescribed, apply to the Assessing Officer for the allotment of a tax-collection account number.
(2) Where a tax collection account number has been allotted to a person, such person shall quote such number—
(a ) in all challans for the payment of any sum in accordance with the provisions of sub-section (3) of section 206C;
(b ) in all certificates furnished under sub-section (5) of section 206C;
(c ) in all the returns delivered in accordance with the provisions of sub-section (5A) or sub-section (5B) of section 206C to any income-tax authority; and
(d ) in all other documents pertaining to such transactions as may be prescribed in the interest of revenue.”.