Important Amendment w.e.f 01.06.2016

  • *if payment consideration (or any part of it)* is received in cash of sale of ANY goods/ provision of any service (exceeding Rs. 2. lac), TCS @ 1% should be deducted:
  • MR A purchases goods from distributor for Rs. 8.00 lac on 10.06.2016, payment of Rs. 795000/- has been made by cheque/RTGS on 11.06.2016, balance 5000/- has been paid in Cash on 12.06.2016. Please note that Seller has to collect TCS @ 1% on Rs. 800000/- (i.e. Rs. 8000/-).
  • This TCS is applicable regardless of the fact whether A is dealer in goods or A purchased for his personal consumption.
  • This new provision is seriously going to affect business cash transactions.

Section 206C (1D)

  • If any part amount is received in cash (even a small sum of say Rs. 100) against a Single Invoice of Rs. 2 Lacs or more, towards sale of goods or services (except in case of jewellery where this limit is 5 Lacs)
    • Then 1% TCS has to be collected from customer.
    • Further in case of sale of car exceeding Rs. 10 Lacs either in cash or cheque 1% TCS will be collected.
    • These rules are applicable from 1st Jun 2016.
    • Gold jewellery and bullions were already covered since year 2012.
    • Applicable on Single Bill.
    • If single party is having multiple bills each less than 2 Lacs, then any amount collected in cash will not be liable to TCS.
    • If any payment is liable to TDS, then there will be no TCS under this section for the same payment.
    • Even a patient making payment to any hospital is also covered in this rule. Even government hospital is also liable to collect TCS from patients.
    • Definition of buyer and seller is already there in the section.
    • If seller is state and central government department, any company, firm or individual or HUF liable to Tax Audit, then they are liable to collect TCS.
  • It means no cash payment to be made even in part against Single Bill exceeding 2 Lacs, otherwise Seller to deduct TCS. Or clients better to prefer each bill below Rs. 2 Lacs...

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Financial Management