TCS Certificate AY 2026-27

By | May 8, 2026
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TCS Certificate AY 2026-27

A person required to collect tax at source (TCS) must issue a TCS certificate to the collectee, detailing the amount, rate, and other prescribed particulars. These certificates are generated and downloaded from the TRACES website after processing of TCS statement.

Form and Due Dates:

  • Form: The TCS certificate is issued inForm 27D, downloadable from TRACES. The collector must authenticate it with a digital or manual signature. It includes key details like:

PAN of the collectee.

TAN of the collector.

Challan or Book Identification Number.

Receipt number of the TCS statement filed in Form 27EQ.

  • Duplicate Certificate: A duplicate can be issued upon request, marked as “Duplicate.”
  • Due Dates:

The TCS certificate must be issued within 15 days from the due date of filing Form 27EQ.

Quarterly due dates:

Q1: July 30

Q2: October 30

Q3: January 30

Q4: May 30 of the next financial year.

Consequences of Failure to Collect or Pay Tax Collected at Source (TCS)

A person responsible for collecting tax at source (TCS) and failing to collect or deposit the tax to the credit of the Central Government is deemed an assessee-in-default under the Income-tax Act.

Assessee-in-Default

  • When collector is deemed to be in default:A collector is deemed an assessee-in-default if TCS is not collected or deposited.
  • When collector is not deemed to be in default:The collector is not deemed in default if:

o The collectee has paid tax on such income and filed the return of income under Section 139.

o A certificate from a Chartered Accountant in Form 27BA is submitted electronically.

However, this relief does not apply if the collector fails to collect TCS in the following cases:

– Sale of motor vehicle / notified luxury goods exceeding threshold (Section 206C(1F))

– Remittance outside India under LRS exceeding threshold (Section 206C(1G))

– Sale of overseas tour package (Section 206C(1G))

– Sale of goods exceeding threshold in other cases (Section 206C(1H))

  • Time Limit for Default Orders:An order of default cannot be passed after:

o Six years from the end of the financial year in which TCS was collectible; or

o Two years from the end of the financial year in which a correction statement was furnished, whichever is later.

Interest for Default

  • Failure to Collect TCS:

o Interest is charged at 1% per month or part thereof, from the date TCS was required to be collected to the actual date of collection.

  • Failure to Deposit TCS:

o Interest is charged at 1.5% per month or part thereof, from the date of collection to the actual date of deposit.

  • Assessment Officer’s Order:Interest must be paid as per the Assessing Officer’s computation unless rectified or appealed.

Penalty and Prosecution

  • Penalty:

o Failure to collect TCS attracts a penalty under Section 271CA.

o Failure to deposit TCS attracts penalties under Section 221, except where the Assessing Officer is satisfied with the reasons for default.

  • Prosecution:

o Under Section 276BB, failure to deposit TCS may lead to prosecution.

o Repeat offenses under Section 278A attract harsher penalties unless reasonable cause is proven (Section 278AA).

Charge on Assets

If the collector fails to deposit TCS, the unpaid tax and interest create a charge on all assets of the defaulter.

Appeal Against Default Order

An appeal against an order treating the collector as an assessee-in-default can be filed before the Commissioner of Income-tax (Appeals) [CIT(A)].

Certificate for Collection of TCS at A Lower Rate

Collectee (Buyers, licensees, or lessees) can apply for a certificate to collect Tax Collected at Source (TCS) at a lower rate. The Assessing Officer issues this certificate if the applicant’s tax liability justifies the lower rate.

Eligible Applicants

The application can be made by any buyer, licensee, or lessee for TCS under the following provisions:

  • Sale of alcoholic liquor, scrap, etc. [Section 206C(1)]
  • Lease/licensing of parking lots, toll plazas, mines, or quarries [Section 206C(1C)]
  • Sale of goods exceeding Rs. 50 lakh [Section 206C(1H)]

Ineligible Applicants

Applications cannot be made for TCS reduction under:

  • Sale of motor vehicles or notified goods [Section 206C(1F)]
  • Liberalized Remittance Scheme [Section 206C(1G)]
  • Sale of overseas tour packages [Section 206C(1G)]

Application Process

  • SubmitForm 13online using a Digital Signature or Electronic Verification Code.
  • PAN is mandatory; alternatively, Aadhaar can be used if linked to PAN or in cases where PAN is unavailable.

Assessment of Eligibility

The Assessing Officer evaluates the following before issuing the certificate:

  • Tax on estimated income for the current year.
  • Tax on assessed or returned income for the last four years.
  • Existing tax liability.
  • Advance tax, TDS, and TCS for the current year.

Issuance and Validity of Certificate

  • The certificate is issued to the tax collector, based on the applicant’s request.
  • It is valid for the specified period unless cancelled earlier.
  • After expiration, a fresh application can be made.

Prior Approvals

  • Approval from the Additional/Joint CIT is needed before issuing the certificate.
  • If the cumulative tax foregone exceeds Rs. 50 lakh in major cities (Delhi, Mumbai, Chennai, Kolkata, Bangalore, Hyderabad, Ahmedabad and Pune) or Rs. 10 lakh in other locations, approval from the CIT (TDS) is required.
  • For international buyers, approvals must be obtained from the relevant international taxation authorities.

Requirement to Furnish PAN (For TCS)

Every person responsible for payments subject to Tax Collected at Source (TCS) must furnish their Permanent Account Number (PAN) to the collector. Failure to provide PAN results in TCS being collected at a higher rate.

Requirement for TCS

  • As perSection 206CC, if the collectee fails to provide PAN, tax will be collected at the higher of:

o Twice the rate specified under Section 206C.

o 5%.

o Cap on TCS Rates: From July 1, 2023, the maximum TCS rate is 20%, including under Section 206C(1G).

  • UnderSection 206C(1H):

o Tax is collected at the higher of:

Twice the specified rate under Section 206C(1H).

1%.

It must be noted that Section 206C(1H) is withdrawn with effect from 01-04-2025.

Other Requirements

  1. a)Lower or Nil TCS Certificate:

o PAN is mandatory to apply for a lower/nil TCS certificate in Form 13.

o Aadhaar may be used in place of PAN if linked.

  1. b)Declaration for Nil TCS (Form 27C):

o Resident buyers can declare goods purchased are for manufacturing or production to avoid TCS.

o Declaration requires PAN or Aadhaar.

  1. c)Invalid PAN:

o If PAN is invalid or does not belong to the collectee, it is treated as not furnished, and TCS is collected at a higher rate.

Consequences of Inoperative PAN

  • PAN must be linked with Aadhaar by March 31, 2022, to remain operative.
  • From July 1, 2023, if PAN is inoperative:

o Higher TCS rates apply.

o Lower TCS certificates cannot be obtained.

o Refunds and interest on refunds are disallowed.