A3. It is Legally not required to capture TCS in the incoming side as the seller will be depositing the collected tax against PAN/Aadhar of the buyer
and the same can be adjusted by the buyer against his/her income tax liability. Here there is no Tax credit adjustment against payable and
receivables unlike GST.
As per section 206C(4) of the IT Act, TCS collected by the seller and deposited with the Central Government is deemed to be tax paid on behalf of
buyer and the tax so deposited is available as a credit to the buyer to set it off against its income-tax liability.
Accordingly, since the TCS is in the nature of income-tax paid by the buyer, the buyer will not be allowed to claim deduction of this expenditure.
Therefore, the buyer will not capture TCS on the purchase side and will book it as ‘Advance income-tax’ paid by it.