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Analysis of TCS on cash sale of goods or services w.e.f. 1-6-2016

The seller will not be obliged to collect the tax at source (TCS), if the buyer has deducted the tax at source from the payment. Thus Provider of a service may not be obliged to collect tax, if the recipient has deducted tax at source.

CA Soniya Agarwal

New Sub Section (1D) of Section 206C is as follow:

Every person, being a seller, who receives any amount in cash as consideration for sale of bullion or jewellery or any other goods (other than bullion or jewellery) or providing any service shall, at the time of receipt of such amount in cash, collect from the buyer, a sum equal to 1% of sale consideration as income-tax, if such consideration, —

(i) for bullion, exceeds Rs 2,00,000 or

(ii) for jewellery, exceeds Rs 5,00,000 or

(iii) for any goods, other than those referred to in clauses (i) and (ii), or any service, exceeds Rs 2,00,000

Provided that if any transaction covered under TDS than TCS will not be applicable on it.

206C (1E) – Nothing contained in sub-section (1D) in relation to sale of any goods (other than bullion or jewellery) or providing any service shall apply to such class of buyers who fulfil such conditions, as may be prescribed. {Not yet prescribed}

206C (1F) – Every person, being a seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding Rs 10,00,000, shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 1% of the sale consideration as income-tax.

Persons who are required to collect TCS as “Seller” are:

a) Central Government,

b) A State Government or

c) Any local authority or

d) Corporation or authority established by or under a Central, State or Provincial Act, or

e) Any company or

f) Firm or

g) Co-operative society and also includes

h) An individual or a Hindu undivided family whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which the good are sold / services are provided.

Note:

1. The seller will not be obliged to collect the tax, if the buyer has deducted the tax at source from the payment. Thus Provider of a service may not be obliged to collect tax, if the recipient has deducted tax at source.

Example : If Mr A rendered the services to Mr B for Rs 300000 and Mr B Deducted TDS on Rs 300000 before making the payment to  Mr A, then Mr A is not obliged to deduct TCS of Mr B

2. The limit of Rs.2 lakh would apply for each transaction or bill of purchase or expense separately, and therefore, though all the transactions put together for the year may exceed the limit, if each transaction of purchase or expense is below Rs.2 lakh, the provisions of TCS would not apply.

Example – If A sale goods to B for Rs 5 laks (invoice number 501), B paid payment to the A in five instalment in cash than TCS @ 1 percent will be deducted as bill amount is more than 2 laks.

Example If A sale goods to B for Rs 5 laks under five invoice (invoice number 501 to 505), B paid payment to the A in one instalment in cash than TCS @ 1 percent will not be deducted as bill amount is less than 5 laks.

Example: A purchased goods from a dealer for Rs. 8 lakhs on June 1, 2016. Payment of Rs. 7, 80,000/- is made by cheque on June 7, 2016. The balance of Rs. 20,000/- is paid in cash on June 8, 2016. On June 8, 2016 the seller will collect TAX AT SOURCE @ 1% of Rs. 8 lakhs

3. This Rule will be applicable irrespective of the fact whether the buyer is a manufacturer, trader or the purchase is for personal use. However, the purchaser can obtain a lower TCS certificate by submitting Form No. 13 to the Assessing Officer.

4. Seller/service provider is required to take PAN of the purchaser/recipient of service. The person raising bill shall ensure after verification that PAN has been correctly furnished and mentioned in the bill. If PAN is not available, a declaration in Form No. 60 should be taken from the purchaser/recipient of service. Such a person is required to retain Form No. 60 for a period of 6 years from the end of the financial year in which the transaction is undertaken.

5. Seller shall submit Quarterly statement in Form 27EQ within following due dates

Sl. No. Quarter of the financial year ended Due date
(1) (2) (3)
1. 30th June 15th July of the financial year
2. 30th September 15th October of the financial year
3. 31st December 15th January of the financial year
4. 31st March 15th May of the financial year immediately following the financial year in which collection is made

6. TCS so collected shall be deposited within 7 days from the close of month of collection to the credit of the Central Government.

7. TCS certificate in form 27D shall be furnished to the collectee within following due dates

Sl. No. Quarter of the financial year ended Due date
(1) (2) (3)
1. 30th June 30th July of the financial year
2. 30th September 30th October of the financial year
3. 31st December 30th January of the financial year
4. 31st March 30th May of the financial year immediately following the financial year in which collection is made

8. “Statement of Financial Transactions “ has to be furnished in form 61A by all assessee liable to Tax Audit u/s 44AB in case receipt of cash payment exceeding Rs 2,00,000 for sale of goods/services of any nature.

9. If the buyer does not have PAN and has submitted the Form 60, a half yearly return in Form 61 needs to be filed by 30th October and 30th April, for the periods from April-September and October-March. [Rule 114D].

Categories: Income Tax

View Comments (16)

  • will this section also apply to me if my customer directly deposits cash more than Rs. 200000 in my account ?

  • Dear Sir
    Agar bill amount 500000 ka bill he uska payments 480000 check se kiya balance 20000/cash se kiya to TCS KIYON lagega because amount 200000 se uper ki cash payments ki

  • Dear Sir
    Agar bill amount 500000 ka bill he uska payments 480000 check se kiya balance 20000/cash se kiya to TCS KIYON lagega because amount 200000 se uper ki cash payments ki

  • Sir I Sold Goods In Five Invioce InFive One Invoice Vale Are 100000 Rs And I Recived Cash In Party Pament 10000 Rs Each . And Eyar Ending Party's Closing balance Is Nill then TCS Liabilites Are make On sealer.

  • Sir 3 Invoce And Each 100000 Rs
    100000 Dt. 1.6.16 19000 rs 1.6.16 cr
    100000 dt. 2.6.16 19000 Rs 2.6.16 cr
    100000 Dt 3.6.16 19000 rs 3.6.16 cr
    ---------- 19000 rs 4.6.16cr
    300000 19000 rs 5.6.16 cr
    19000 rs 6.6.16 cr
    19000 rs 7.6.16 cr
    19000 rs 8.6.16 cr
    19000 rs 9.6.16 cr
    19000 rs 10.6.16 cr
    19000 rs 1.3.17 cr
    19000 rs 2.3.17 cr
    19000 rs 3.3.17 cr
    19000 rs 4.3.17 cr
    19000 rs 5.3.17 cr
    15000 rs 31.03.17 cr
    ---------------
    300000 Rs
    Sir this type party account is clear in31st March 2017 in this condition tcs is aplicable or not.

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