Budget 2016 has effected  changes / New Provisions with effect from 01.06.2016 in respect of Tax Collected at Source (TCS) on Sale of Bullion, Jewellery, Motor vehicle and Sale in cash of any goods. In this Article Author has discussed such Changes and TCS Rate Chart WEF 01st June 2016 after considering Budget 2016 Amendments.

Section 206C- Tax Collected at Source:

TCS is the Tax Collected at Source by the seller (collector) from the buyer (collectee)”. Every person, being a seller, shall collect tax at source (TCS) from the buyer of goods specified in section 206 C (1).

As per section 206C, tax has to be collected at source in the following case:

Nature of Goods TCS Rate
Alcoholic liquor for human consumption 1%
Tendu Leaves 5%
Timber obtained under a Forest Lease 2.5%
Timber obtained by any mode other than Forest Lease 2.5%
Any other Forest produce not being forest timber or tendu leaves 2.5%
Scrap 1%
Minerals being Coal or Lignite or Iron ore 1%
Parking Lot, Toll Plaza, Mining and Quarrying 2%

Where ANY amount of consideration is received in cash on sale of :- Bullion (consideration exceeds Rs. 2 Lakhs), Jewellery (consideration exceeds Rs. 5 Lakhs), and with effect from June 1,2016 ,Any other goods and services (exceeding Rs. 2.00 Lakh) if TDS Provision is not applicable

1%

Where amount is received by cheque or any other mode on sale of :- Motor vehicle of the value exceeding Rs. 10.00 Lakh (applicable from June 1,2016)

1%

Finance Act, 2016 imposed TCS on sale of goods or services on receiving consideration in cash with effect from 2016, June 1. Finance Act 2016 has made the following amendments in section 206C of the Act : –

In order to reduce the quantum of cash transaction in sale of any goods and services and for curbing the flow of unaccounted money in the trading system and to bring high value transactions within the tax net, it is proposed to amend the Section 206C of Income Tax Act,1961 to provide that the seller shall collect the tax at the rate of one per cent(i.e. 1% of sale value) from the purchaser on –

– Sale of motor vehicle of the value exceeding ten lakh rupees (Where amount is received by cash, cheque or any other mode); or

– Sale in cash of any goods (other than bullion and jewellery), or providing of any services (other than payments on which tax is deducted at source under Chapter XVII-B) exceeding two lakh rupees.( Amount of consideration is received in cash or partly in cash).

(IN above even if part payment is been made in cash than TCS will be collected on Full amount)

When Tax has to be Collected: Sec. 206 C(1)

Tax (TCS) has to be collected at the time of debiting of the amount payable to the buyer or at the time of receipt of payment, whichever is earlier.

Definition of various Term in TCS

(a) Seller:

According to this provision every following person is covered under the scope of the seller for the purpose of TCS:

(i) The Central and State Government.

(ii) Local authority

(iii) Statutory corporation or Authority

(iv) Company

(v) Firm

(vi) Co-operative society

(vii) Individual or Hindu undivided family (HUF) ,whose books of accounts are liable to be audited under section 44AB of Income Tax Act.

(b) Buyer:

(i) According to the this provision Buyer Means a person who obtains in any sale, by way of auction, tender or any other mode, goods of the nature specified in the Table in sub section(1) or right to receive any goods but does not include

1. Public sector company, Central Government/State Government, Embassy, a High commission, legation, consulate and the trade representation of a foreign state and a Club ;

2. A buyer in the retail sale of such goods purchased for personal consumption .

(ii). sub section (1D) means a person who obtains in any sale, goods of the nature specified in the said sub section;

‘Therefore goods purchased by end use consumers are not covered under TCS. Tax collection at lower rate: Section 206C (9):-

Buyer can apply to his Assessing Officer in Form 13 for tax collection at lower rate. On receiving application in Form 13, Assessing officer, if satisfied, may issue such certificate directly to seller under advice to the buyer. This rates is applicable for a specific seller, whose name is given in the certificate and not applicable as blanket approval for purchase of specified goods from anybody else. Where such certificate is given, the person responsible for collecting tax shall, until such certificate is cancelled by the Assessing Officers, collect the tax at the rates specified in such certificate. The certificate shall be valid for the assessment year specified in that certificate unless cancelled by the AO at any time before the expiry of the period of the validity of the earlier certificate .

Nil rate /Exemption: Section 206C (1A)/ (1B)

Notwithstanding anything contained in sub section (1) of section 206C, No tax shall be deducted from a buyer(resident in India) who purchases specified goods not for the purpose of trading but for the manufacturing, processing, or production of goods/article or thing and gives a declaration in duplicate in Form 27C to the seller. The seller shall deliver one copy, form 27C collected from buyer, to Chief Commissioner/ Commissioner of Income tax .

TCS Return:

The seller contractor i e. deductor has to file a quarterly return in form 27EQ and in Form 27A and has to issue the TCS certificate to Deductee in Form 27D on or before following Due Date:

Quarter Due Dates for filing TCS Return Due Dates for issuing TCS Certificate
April to June 15th July 30th July
July to September 15th October 30th October
October to December 15th January 30th January
January to March 15th May 30th May

Section 206C (7) prescribe Interest at the rate of 1% per month or part thereof for late collection and/or late deposit of TCS with Government.

CA Mohit Singhal E-mail:-fcasmc@gmail.com

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30 responses to “TCS Rate Chart on sale of Goods & Services wef 01.06.2016”

  1. Prakash shah says:

    While purchasing Motor vehicle chassis of nearly
    17.00 lac Rs. By Municipal Corporation, dealer is
    Liable to charge TCS IN invoice or not ? If not to charge than what is the procedure to follow

  2. Krishnakanth Madineni says:

    When TCS need to be deducted on Alcoholic liquor for human consumption, why retail bar shops were not deducting TCS when they are selling Alcohol to general public.

  3. CSSAMBIT says:

    IF A BUYER PAID TAX(TCS) ON PURCHASE OF MOTOR VEHICLE,CAN CLAIM REFUND AT THE TIME OF FILLING OF IT RETURN?

  4. CSSAMBIT says:

    if a buyer pays tax(tcs) can apply for refund of its IT return?

  5. NIZAMUDDEEN says:

    IF PARTY TAKE MATERIAL OF RS 200000/- AND BILL WILL RAISED BY TWO TYPE ONE IS CREDIT BILL & CASH BILL THEN ALSO WE SHOULD TAKE THE TCS

    • Suman Dey says:

      if the sale amount of a single bill of Rs. 2.15 Lakh we will get payment of Rs. 1.5 Lakh by check and balance in cash of Rs. 65 Thousand then please let me know that TCS is applicable there or not???

      • jIMMY says:

        f invoice value will 7 lac and buyer give us 5 lac in CHEQUE & 2 lac in cash than tcs liability will on 2 lac or whole amount . pls need your advise on this .. thanks this bill in f y 2016-17 28/02/2017

  6. SUDESH GARG says:

    Please inform if TRACTOR is also included in Motor Vehicle.

  7. kanveesh ji says:

    sir,
    if i am a wholeseller (non taxable item) and made 4 invoices on a party within 2 months, each invoice is below 2 lac. i.e. 190000 each
    and even receives amt bill wise in next 4 months…… will this section attract in this case..?????

  8. chandan says:

    if a party make invoices for his “customer -A” and each invoice value Rs. below 2 lakh (suppose Rs. 90000/- each) total value of invoice 350000/- and whole amount collected in cash this amount is below Rs-20000. then section 206c apply or not.

  9. Arjun says:

    Hi,
    If there is sale of Goods from Dealer to Dealer whether dealer is liable to collect from other dealer TCS @1% if transaction is above 10Lakh?

  10. rudresh says:

    Hi
    One Car Value Rs. 8.5 Lakhs, we receive advance booking 50000/- balance by loan in this case TCS applicable ?

    • PUNEET GOYAL says:

      if advance has been received in cash then seller is required to collect tcs @ 1% as per section 206-C(1D) not as per section 206-C(1F)

  11. CA Sanjay Saini says:

    Dear sir,
    if a party make three invoices for his “customer -X” and each invoice value Rs. below 2 lakh (suppose Rs. 190000/- each) total value of invoice 570000/- and whole amount collected in cash . then any provision of section 206c apply or not…..
    **means party require to collect any amount as TCS @ 1% when each invoice below Rs. 2 lakh

  12. sanjay saini says:

    Dear Sir,
    if party make 5 invoices and each invoice value below Rs. 2 lakh (suppose each invoice Rs. 180000/-) and total invoice amt . Rs. 9 lakh and whole amount received by party in cash and then provision of TCS attracte….
    *** seller party liable to collect TCS on receiced cash amount Execeds Rs. 200000/- when each invoice below two lakh

  13. sanjay saini says:

    Dear Sir,
    if party make 5 invoices and each invoice value below two lakh(suppose Rs. 180000*5) and total value of all invoice Rs.900000/- and whole amt. received in cash ……then party not required to collect TCS????????????

  14. Harish Agarwal says:

    Dear Sir, Please advice for Hospital.firstly TCS rule will applicable for Hospital or not, If applicable then If Patients given money partly. but total amount is more the 2 lakh then TCS?????, If patients total bill amount is 3 lakh but Cash less then 2 Lakh & balance in cheque then TCS???? or Cash more then two Lakh & balane by Chequethen TCS????, Total Bill more then 2 Lakh But patients paid less then 2 lakh & balance discount to patients then TCS???

  15. Niket Kumar Sinha says:

    Sir,
    Can any one clarify that if we made a sales for 1.75 Lac + VAT 0.25 Lac total invoice value Rs.2 Lacs then what will be the taxable value.

  16. sharan says:

    sir I’m a used car dealer and I deal in every budget car which may exceed 2 lakh and as per tcs would i liable to pay 1% as sale of any goods or service or would i be liable to pay tcs 1% on cars exceeding 10 lakhs??

  17. sharan says:

    sir as I’m a used car dealer and sale used cars of all values so would i be liable to pay tcs in case of selling a used car to a customer exceeding 2 lakhs but not exceeding 10 lakhs???

  18. Akshay Sankhala says:

    Sir in this Para:-
    “”””Where ANY amount of consideration is received in cash on sale of :- Bullion (consideration exceeds Rs. 2 Lakhs), Jewellery (consideration exceeds Rs. 5 Lakhs), and with effect from June 1,2016 ,Any other goods and services (exceeding Rs. 2.00 Lakh) if TDS Provision is not applicable – See more at: http://taxguru.in/income-tax/tcs-rate-on-sale-of-goods-and-services-wef-01-06-2016.html#sthash.iD3TwhZS.dpuf“”””
    What do you mean by “””””Any other goods and services (exceeding Rs. 2.00 Lakh)”””””???

  19. ca Sharwan Kumawat says:

    prbleme is it applicable for every transaction individually or n aggregate to all trans. in a year ?????

  20. saurabh aggarwal says:

    sir, whether the tcs provision of 1% on sale of goods also applies on agriculture goods(eg : imported fruits sold in local market) ..????

  21. PRATIK SHAH says:

    Sir, Nice Article given by you.
    If during the year i am raising 10 Sale Invoice to one Party out of which 7 Invoice is of Over & above Rs. 2 Lakhs & 3 Invoice is Below Rs. 2 Lakh than in such case if i am receiving cash against which bills how do i Justify?
    or If i am receiving cash against invoice of Below Rs. 2 Lakh & i had not Collected TCS than how do i justify such case to Assessing officer?

    • Hardeep says:

      AS PER THE PROVISION OF THE AMENDMENT EACH BILL WILL BE COUNTED AS SEPARATE, SO SEPARATE PROVISION WILL APPLY FOR THE EACH CASH TRANSACTION.

      • Birendra says:

        If invoice value will 5 lac and buyer give us 2 lac in credit card & 3 lac in cash than tcs liability will on 3 lac Or 2 lac or whole amount . pls need your advise on this .. thanks

    • sudhir kr gupta says:

      Dear Pratik

      If U have received all Cash then U have to deduct TCS on 7 Invoices which are above 2 Lac. U can justify the Authority if payment in Cheque or DD or Transfer is received. But make sure to give correct Figure as the authoriy may confirm the mode from the purchaser also.
      Sudhir Kr Gupta

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