Section 206CA of ITA, 1961 : Section 206Ca: Tax Collection Account Number

Explanation using Example

Imagine a scenario where a car dealership, "Speedy Wheels," sells a luxury car to a customer. As per Section 206C of the Income-tax Act, Speedy Wheels is required to collect tax at source (TCS) on the sale of the car. To comply with the law, the dealership must first apply for a tax collection account number (TAN).

Once Speedy Wheels has been allotted a TAN, it must:

• Quote this TAN on all payment challans when remitting the collected TCS to the government.
• Include the TAN on TCS certificates provided to the customer, indicating the tax collected.
• Mention the TAN in all TCS returns filed with the income tax authorities.
• Use the TAN in any other prescribed documents related to the transaction.

This ensures that all tax collection activities by Speedy Wheels are properly documented and traceable by the tax authorities, facilitating compliance and transparency in tax matters.

Note: Section 206CA was relevant until the 1st of October, 2004, after which it ceased to apply.