Here’s a structured overview of Collection of Tax at Lower Rate under Section 206C(9), (10), (11) and Rules 37G & 37H:
(For specified goods like scrap, minerals, timber, etc.)
| PROVISION | KEY FEATURE | PROCEDURE | DOCUMENTATION | VALIDITY |
| Section 206C(9) | Allows collector to apply for lower/nil TCS rate | File application to Assessing Officer (AO) | Submission of financials & tax liability proof | FY-specific |
| Section 206C(10) | AO may issue certificate for lower/nil TCS | AO examines applicant’s tax compliance | Certificate mentions applicable rate | As specified by AO |
| Section 206C(11) | Conditions for certificate issuance | Must demonstrate lower tax liability | Previous years’ ITRs, current year estimates | – |
| Rule 37G | Application format for lower TCS | Form 13D (for seller/collector) | PAN, turnover details, tax computation | – |
| Rule 37H | Certificate format | Form 13E (issued by AO) | Specifies goods, rate, validity period | Typically 1 FY |
Practical Implications:
- Eligibility: Available when actual tax liability is lower than standard TCS rate
- Process:
- Seller files Form 13D with jurisdictional AO
- AO verifies past compliance and current estimates
- If approved, issues Form 13E specifying reduced rate
- Compliance Requirements:
- Maintain separate records for such transactions
- File quarterly returns reflecting certificate details
- Re-apply annually as certificates expire March 31
- Recent Updates:
- E-application process now available via TRACES portal
- Stricter scrutiny for mining and scrap dealers
- Shorter processing timelines (30 days) for manufacturing units
Example: A timber merchant with ₹15 crore turnover gets certificate for 0.5% TCS (vs standard 2.5%) by demonstrating consistent tax payments below this rate.
Penalties:
- Misuse of certificate → Revocation + penalty under Section 271(1)(c)
- Non-reporting → ₹10,000 per instance under Section 271H
Pro Tip: Combine with Form 27C (buyer declaration) for maximum benefit in manufacturing supply chains.
