Sandeep Ahuja & Co.

Established in the year 1986, we are a leading chartered accountancy firm based in Delhi & NCR rendering comprehensive professional services which include statutory audit, internal audit, direct tax, transfer pricing, GST, bank audit, propriety audit, cost accounting, internal financial controls and risk advisory.

Saturday, June 25, 2016

CBDT reduces burden by limiting 1% TCS to cash receipts in transactions over Rs.2 Lacs- Circular 23/2016 on 24.06.16

CBDT has provided major relief by issuing a Circular No.23/2016 on 24.06.2016 with respect to further amendment to amended Section 206C.
As per the amended Section 206C of Income Tax Act where as Section 206C(1D) was added to it, it was provided that the seller shall collect tax @1% from the purchaser on sale in cash of certain goods or provision of services exceeding Rs.2 Lacs.
Now CBDT has clarified the applicability of the provisions wrt TCS where sale consideration is partly in cash and partly in cheque. CBDT has given a relief by issuing a circular which provides a under:
ü  Tax collection at source will not be levied if the cash receipt does not exceed Rs.2 Lacs even if sale consideration is for than Rs.2 Lac.
ü  The TCS shall be levied only on cash component of the sale consideration and not on total consideration.
Example: Goods worth Rs.5 Lacs sold but cash consideration is Rs.1 Lac then no TCS and if Cash consideration is Rs.2.5 Lacs then TCS will be applicable on Rs.2.5 Lacs and not on Rs.5 Lacs.

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