CBDT after representation from various stake holders has issued Circular No. 23/2016 dated 24.06.2016 regarding clarity of applicability of Section 206C(1D) on transactions where sale consideration received is partly in cash and partly in cheque.

QuestionClarification
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 Rs. 2 lac.No. TCS will not be levied if the cash receipt does not exceed Rs. 2 lac, even if the sale consideration is more than Rs. 2 lac.
Whether TCS u/s. 206C(1D) will apply only to cash component or on whole sale consideration.Under Section 206C(1D) TCS is required to be collected on cash component of the sale consideration only and not on whole of the sale consideration.

Example:

ParticularsScenario 1Scenario 2Scenario 3
Invoice Value5,00,0005,00,0001,90,000
Cash received1,95,0003,00,0001,90,000
Applicability of TCS u/s. 206C(1D)NoTCSTCS @ 1% on 3,00,00NoTCS

Compiled by:
CAJugal K. Parmar
jugalkparmar@gmail.com

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