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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.
| Question | Clarification |
| 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:
| Particulars | Scenario 1 | Scenario 2 | Scenario 3 |
| Invoice Value | 5,00,000 | 5,00,000 | 1,90,000 |
| Cash received | 1,95,000 | 3,00,000 | 1,90,000 |
| Applicability of TCS u/s. 206C(1D) | NoTCS | TCS @ 1% on 3,00,00 | NoTCS |
Compiled by:
CAJugal K. Parmar
jugalkparmar@gmail.com
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Invoice Value = 500000
Cash received in a day = 100000 (in 5 instalments)
Will TCS be applicable?