The "taxable value" for Tax Collected at Source (TCS) refers to the specific transaction amount or value on which TCS is levied by the seller from the buyer. This value is not a fixed amount but rather depends on the type of goods or services involved and often includes certain monetary thresholds. When these thresholds are crossed, TCS becomes applicable on the amount exceeding the specified limit, or on the entire transaction value in other cases.
Understanding Tax Collected at Source (TCS)
Tax Collected at Source (TCS) is a system where a seller collects tax from the buyer at the time of sale. The purpose of TCS is to collect tax at an early stage of a transaction, ensuring revenue collection for the government on specific categories of goods and services. The collected amount is then deposited with the government.
How Taxable Value is Determined for TCS
The determination of the taxable value for TCS depends on the nature of the transaction. For some items, TCS is applicable on the entire sale value, while for others, it's only on the value exceeding a specific threshold. Below is a detailed breakdown of the taxable values and corresponding TCS rates for various goods and services:
Specific Categories and Their Taxable Values for TCS
The following table illustrates the taxable value and applicable rates for different categories of goods and services where TCS is mandated:
| Type of Goods/Services | Threshold | Taxable Value for TCS | TCS Rate |
|---|---|---|---|
| Minerals (lignite, coal, iron ore) | No specific threshold mentioned | Entire value of the minerals | 1.00% |
| Bullion | Exceeds over ₹2 lakhs | Value exceeding ₹2 lakhs | 1.00% |
| Jewellery | Exceeds over ₹5 lakhs | Value exceeding ₹5 lakhs | 1.00% |
| Purchase of Motor Vehicle | Exceeds ₹10 lakhs | Value exceeding ₹10 lakhs | 1.00% |
| Parking Lot, Toll Plaza | No specific threshold mentioned | Entire contract/collection value | 2.00% |
| Mining and Quarrying | No specific threshold mentioned | Entire contract/service value | 2.00% |
- Example for Motor Vehicle Purchase: If a motor vehicle is purchased for ₹12 lakhs, the TCS would be applied on ₹2 lakhs (₹12 lakhs - ₹10 lakhs) at a rate of 1.00%.
- Example for Jewellery Purchase: If jewellery is purchased for ₹6 lakhs, the TCS would be applied on ₹1 lakh (₹6 lakhs - ₹5 lakhs) at a rate of 1.00%.
For goods like minerals (lignite, coal, and iron ore), parking lots, toll plazas, and mining and quarrying, the TCS is generally applied to the entire transaction value as per the rates specified, without a stated threshold for applicability.
Understanding these thresholds and the basis of the taxable value is crucial for both sellers who collect TCS and buyers who pay it, ensuring compliance with tax regulations. For more detailed information on TCS, you can refer to resources like Tax Collected at Source (TCS) by Groww.
