1. Amendment in Section 206C(1D)
of Income-tax Act, 1961
Section 206C(1D) of Income Tax Act, 2016 has been Amendment
by Finance Act, 2016 and also CBDT has issued clarification regarding amendment
in Section 206C(1D) of Income Tax Act, 1961 vide Circular no 22/2016 dated 8th June 2016
Every seller, who receives any amount in cash on
sale of:
i)
Bullion,
exceeds Rs. 2,00,000; or
ii)
Jewellery,
exceeds exceeds Rs. 5,00,000; or
iii)
Any goods,
other Bullion and Jewellery exceeds Rs. 2,00,000, or
iv)
Any
service, exceeds Rs. 2,00,000
Shall collect
from the buyer, a sum equal to one per cent
(1%) of sale consideration as income-tax
Provided that
no tax shall be collected at source under this sub-section on any amount on
which tax has been deducted by the payer under Chapter XVII-B.
2.
Clarification by
CBDT on TCS on Cash Sale exceeds Rs. 2,00,000/-
CBDT has issued
clarification on TCS on Cash Sale exceeding Rs. 2 lakhs vide Circular No. 23/2016 dated 24th June, 2016
a)
In order to curb the cash economy, Finance Act
2016 has amended section 206C of the Income-tax Act to provide that the seller
shall collect tax at the rate of one per cent from the purchaser on sale
in cash of certain goods or provision of services exceeding two lakh rupees.
b)
Subsequent to the amendment, a number of
representations were received from various stakeholders with regard to the
scope of the provisions and the procedure to be followed in case of the amended
provisions of Section 206C of the Act. The Board, after examining the
representations of the stakeholders, issued FAQs vide Circular no 22/2016 dated 8th June 2016. The Board has further decided to clarify the issue as regards
applicability of the provisions relating to levy of TCS where the sale
consideration received is partly in cash and partly in cheque by issue of an
addendum to the above circular in the form of question and answer as under:
Question 1: Whether
tax collection at source under section 206C(1D) at the rate of 1% will apply in
cases where the sale consideration received is partly in cash and partly in
cheque and the cash receipt is less than two lakh rupees.
Answer: No. Tax
collection at source will not be levied if the cash receipt does not exceed two
lakh rupees even if the sale consideration exceeds two lakh rupees.
Illustration: Goods
worth Rs. 5 lakhs is sold for which the consideration amounting to Rs.4 lakhs
has been received in cheque and Rs.1 lakh has been received in cash. As the
cash receipt does not exceed Rs.2 lakh, no tax is required to be collected at
source as per section 206C (1D).
Question 2: Whether
tax collection at source under section 206C (1D) will apply only to cash
component or in respect of whole of sales consideration.
Answer: Under section
206C (1D), the tax is required to be collected at source on cash component of
the sales consideration and not on the whole of sales consideration.
Illustration: Goods
worth Rs. 5 lakhs is sold for which the consideration amounting to Rs.2 lakhs
has been received in cheque and Rs.3 lakh has been received in cash. Tax is
required to be collected under section 206C (1D) only on cash receipt of Rs.3
lakhs and not on the whole of sales consideration of Rs.5 lakh.
Conclusion: TCS shall be collected only on the amount
received in cash, if cash received exceeds Rs. 2,00,000 on sale in
cash of certain goods or provision of services exceeding two lakh rupees.
Circular no 22/2016 dated 8th June 2016
Circular No. 23/2016 dated 24th June, 2016
Circular no 22/2016 dated 8th June 2016
Circular No. 23/2016 dated 24th June, 2016
