There had been waves of changes since beginning of calendar year 2016 in Rules followed by Finance Act, 2016 and now further reinforced by the Finance Act, 2017. In fact, every business person is trying to adjust to the new law in Direct Taxes at the earliest, without loss of time, so as to be in GST-ready mode wef 01/07/2017, as per the present roadmap .
Thus, the businesspersons have to adapt to the changes brought in Direct Taxes. Author is trying to decode the various sections/rules in simple language:
1) Keep following points in mind when selling goods or providing services:
i) Do not raise any single Sale Bill/Transaction of Rs. 200000/- or more if the buyer is likely to make payment in cash against such bill. Do not collect Rs. 200000/- or more in a day in cash from a person against various bills, which are otherwise for less than Rs. 200000/- each.Online GST Certification Course by TaxGuru & MSME- Click here to Join
ii) If the sale / transaction value is exceeding Rs. 200000/- irrespective of the mode of payment(cash or cheque), then collect PAN or Form No. 60 from the buyer and keep in record.
iii) If you are a hotel, restaurant, tour operator for foreign tours, money changer etc. , then collect PAN or form 60 if the bill or total of bills exceeds Rs. 50000/- and the buyer is making payment in cash.
iv) If you are a Motor Vehicle Seller, then collect PAN or form 60, as the case may be. Further if the value of vehicle exceeds Rs. 10 Lacs, then collect 1% TCS on Sale Consideration if the buyer has PAN and if he does not have one, then collect TCS @ 5%. TCS provisions do not apply if seller is Individual/HUF, not covered by the 44AB provisions for FY 2016-17
v) If you are seller of Alcoholic Liquor for human consumption, Tendu leaves, Timber obtained under a forest lease/ without lease, Any other forest produce, Scrap, Minerals of Coal, Lignite or Iron Ore or if you are granting lease or license for parking lot, toll plaza, Mining or Quarry rights, then collect TCS at the applicable rate. If buyer does not furnish PAN, then collect form 60 and charge twice the applicable TCS Rate or 5%, whichever is higher. Do not collect TCS from exempted categories persons and manufacturers who furnishes form 27C
2) Keep following points in mind when purchasing the goods or availing the services:
i) Do not make cash payment of Rs. 10000/- per day per person against any expense/purchase whether for revenue or capital goods. However, Rs. 10000/- limit does not apply to Rule 6DD cases of payments to various categories of persons. Now the payment cannot exceed Rs. 200000/- per day per person even to such exempted categories of Rule 6DD, except payment to Government. In case of Transporters, the limit of Rs. 10000/- would be read as Rs. 35000/-
ii) If you are covered by provisions of Section 44AD during FY 2016-17, then you can make the cash purchase /expenses above Rs. 10000/- but below Rs. 200000/- per day to a person.
iii) If the transaction value of purchases exceeds Rs. 200000/-, irrespective of the mode of payment (cash or cheque), then collect the PAN of seller or form 60, as the case may be.
(The author is a Jaipur based practicing Chartered Accountant and can be reached on 09829063908, email@example.com)