Section 206C (4): Credit for Tax Collected at Source (TCS)

Table of Contents

1. Legal Provision

Section 206C(4)ensures that the buyer (collectee) receives credit for the TCS amount deducted by the seller (collector) when filing their Income Tax Return (ITR).
Purpose: Prevents double taxation by allowing buyers to offset TCS against their final tax liability.

REQUIREMENT	DETAILS
Valid PAN	Buyer’s PAN must be correctly quoted in the TCS return (Form 27EQ).
Matching in Form 26AS/AIS	TCS must reflect in the buyer’s Form 26AS or Annual Information Statement (AIS).
Income Declared in ITR	The transaction must be reported in the buyer’s ITR under the correct head (e.g., “Business Income,” “Capital Gains”).
Seller’s Compliance	Seller must have:

Exceptions

No Credit If:
- PAN is missing/invalid.
- TCS was not deposited by the seller.
- Income is not declared in ITR.

- ITR-3/ITR-4 (Business Income): Under “Taxes Paid” → “TCS”.
- ITR-2 (Capital Gains): If TCS relates to property sale.

- If TCS is missing, contact the seller to file a correction statement (Section 206C(3B)).

Transaction: Buyer purchases scrap worth ₹10 lakh (1% TCS = ₹10,000).
Buyer’s ITR:
- Declares ₹10 lakh as business income.
- Claims ₹10,000 TCS credit → Reduces final tax payable.

ISSUE	SOLUTION
TCS not in Form 26AS	Ask seller to file a correction statement.
Wrong PAN linked	Submit Form 71 for manual credit with proof.
Seller didn’t deposit TCS	Buyer can still claim credit if seller later complies (CBDT Circular 18/2023).

✔ TCS credit is automatic if PAN matches in Form 26AS.

✔ Declare income correctly in ITR to claim credit.

✔ Rectify errors via TRACES/Form 71 if TCS is missing.

✔ Sellers must deposit TCS for buyers to get credit.