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Tcs on sale of goods or services exceed rs. 200000

PULKESH GUPTA (Service) (31 Points)

30 May 2016

my query is that TCS applicable on sale of goods or services exceeds Rs. 200000 in single transaction or aggregate during the FY

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CA Hemant Jain (Job) (139 Points)
Replied 30 May 2016

TCS applicable on Each bill where bill amount exceeds Rs. 200000 & full payment or part payment of bill is done by cash.

Aggregation of transactions is not be considered.

CA Hemant Jain (Job) (139 Points)
Replied 30 May 2016

Tax Collection at Source (TCS) 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 going to seriously 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 Lakh or more, towards sale of goods or services (except in case of jewellery where this limit is 5 lakh) then 1% TCS has to be collected from customer.

Further in case of sale of car exceeding Rs. 10 Lakh 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 Lakh, 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.

lekhni agrawal (nil) (21 Points)
Replied 31 May 2016

When a person is liable to collect tax??

When payment is received in cash. Or on invoice date???

navin (Startup) (34 Points)
Replied 29 June 2016

plz find the attached copy for your reference

Attached File : 1267728 20160629154425 40 15509 circular232016.pdf downloaded: 657 times

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 30 June 2016

Hello @ Mr Jain Kindly refer CBDT Circular No. 23/2016 dt. 24 June 2016

Government had clarified liability to collect Tax at Source (TCS) from customer will only and only arise if amount of sales consideration received to us in Cash exceeds Rs. 2 Lakh.

Through this it is very clear, no need to collect TCS from customer if amount of sales consideration received to us do not exceed Rs. 2 Lakh even though the Invoice Value exceeds Rs. Two lakh.

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 30 June 2016

FAQ released by CBDT

Question 1: 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 two lakh rupees.

Answer: No. Tax collection at source will not be levied if the cash receipt does not exceed two lakh rupees even if the sale consideration exceeds two lakh rupees.

Illustration: Goods worth Rs. 5 lakhs is sold for which the consideration amounting to Rs.4 lakhs has been received in cheque and Rs.1 lakh has been received in cash. As the cash receipt does not exceed Rs.2 lakh, no tax is required to be collected at source as per section 206C (1D).

Question 2: Whether tax collection at source under section 206C (1D) will apply only to cash component or in respect of whole of sales consideration.

Answer: Under section 206C (1D), the tax is required to be collected at source on cash component of the sales consideration and not on the whole of sales consideration.

Illustration: Goods worth Rs. 5 lakhs is sold for which the consideration amounting to Rs.2 lakhs has been received in cheque and Rs.3 lakh has been received in cash. Tax is required to be collected under section 206C (1 D) only on cash receipt of Rs.3 lakhs and not on the whole of sales consideration of Rs.5 lakh.

1 Like

CA Hemant Jain (Job) (139 Points)
Replied 06 July 2016

Originally posted by : Vishal Goel
	Hello @ Mr Jain Kindly refer CBDT Circular No. 23/2016 dt. 24 June 2016 Government had clarified liability to collect Tax at Source (TCS) from customer will only and only arise if amount of sales consideration received to us in Cash exceeds Rs. 2 Lakh. Through this it is very clear, no need to collect TCS from customer if amount of sales consideration received to us do not exceed Rs. 2 Lakh even though the Invoice Value exceeds Rs. Two lakh.

Yes Vishal, you are correct according to Circular came dated 24th June,16. My answer was previous to this circular at that time it was correct.

Barun (Auditor) (33 Points)
Replied 26 July 2016

can you please provide the notification/circular on this

Payal (Article) (22 Points)
Replied 29 July 2016

Whether Rs. 2 Lakh limit will be seen for each transaction or whether Rs. 2 Lakh will be seen for whole year?

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 29 July 2016

The threshold limit for the purpose of collection of tax of Rs. 2,00,000 in case of sale of goods/provision of services should be considered transaction-wise and not aggregate of all the transactions for the year.