For the benefit of its members, the Institute of Chartered Accountants of India’s Direct Taxes Committee has published the Handbook on Income Tax TCS (Tax Collection at Source). The goal of this handbook is to provide members with the most recent changes to the provisions of Tax Collection at Source (TCS), as amended by the Finance Act 2022.
Introduction to the ICAI’s Income Tax TCS Handbook
The recent amendments to the provisions of Tax Collected at Source prompted the ICAI’s Committee on Direct Taxes to publish this handbook, with the goal of providing members with a basic understanding of the topic. The handbook explains the concepts and procedures of presumptive taxation in simple and concise language, with the goal of updating members’ knowledge.
Collection of tax at source (TCS) requires taxpayers to collect tax at the same time they collect the proceeds of sale. TCS provisions were enacted to prevent unaccounted expenditure or investment. Any person liable under TCS provisions is required to collect the tax on the sale of specified goods or services, such as licence fees. The scope of TCS is so broad that most taxpayers involved in businesses, providing services, or government departments are required to collect tax at source on payments received for the sale of goods or services specified in various provisions of Income Tax Act Chapter XVIIBB.
Concept of TCS
TCS was introduced as an anti-evasion measure to assess the income of individuals engaged in certain trades such as spirits and forest contracts. The seller will collect the tax at the point of sale, at a fixed percentage of the amount payable by the buyer. It became effective on June 1, 1988, and the Income Tax Act included specific provisions for TCS. These provisions require specified individuals to collect a fixed percentage of tax from their buyers on exceptional transactions. The majority of these transactions are of a commercial or trading nature.
TCS is a set of provisions that require taxpayers to collect tax at the point of sale while also collecting the proceeds of sale. The ICAI’s Handbook on Income Tax TCS (Tax Collection at Source) is a comprehensive guide to assist the CA fraternity in more objectively complying with the provisions and procedures. It is a must-have resource for all Chartered Accountants who want to stay up to date on the latest TCS provisions.
ICAI’s Handbook on Income Tax TCS (February 2023)