The Central Board of Direct Taxes (CBDT) has issued Circular clarifying that the Tax Collected at Source (TCS) will not be applicable when cash component of the payment for goods and services is not exceeding Rs 2 lakh, even when the total payment is more than this amount.
CBDT in its latest circular stated that, “TCS will not be levied if the cash receipt does not exceed Rs 2 lakh even if the sale consideration exceeds Rs 2 lakh.” The circular further clarified that, TCS is required to be collected at source on cash component of the sales consideration and not on the whole of sales consideration.
The clarification has came in regard to the applicability of the provisions to levy TCS, as announced in the Budget, where the sale consideration received is partly in cash and partly in cheque. Presently, Income Tax Department is charging 1% TCS on cash purchase of bullion in excess of Rs 2 lakh and jewellery in excess of Rs 5 lakh since July 1, 2012 and there has been no change in that position.