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TCS on cash transaction

Today we discuss on TCS on cash transaction, Government of  India has widens the provision of TCS in order to stop cash transaction in market and also to control the black money to some extend. In this blog we will discuss on various question asked on the tax collected at source like applicability of TCS,Section of TCS, liability of TCS etc.

Applicability of TCS

TCS is applicable on purchase and sale of goods in cash if bill amount more than 2 laks. TCS will be deducted if following condition has been satisfied –

1 Bill amount is Rs 2 laks or more that 2 laks.

2 Payment received in cash by Saler from the buyer of any amount if bill more than Rs 2 laks.

Example – If A sale goods to B for Rs 5 laks (invoice number 501), B paid payment to the A in five installment than TCS @ 1 percent will be deducted as bill amount is more than 2 laks.

Example If A sale goods to B for Rs 5 laks under five invoice (invoice number 501 to 505), B paid payment to the A in one installment than TCS @ 1 percent will not be deducted as bill amount is less than 5 laks.

Also must read the Latest amendment by the Modi government of ban on Rs 500 and Rs 1000 Notes.

Under which Section TCS levied in income tax?

TCS is levied as per section 206 C of the income tax the latest amendment has been done in section 206c(1d) of income tax act 1961.

Is TCS applicable if buyer is an ultimate consumer?

Yes, TCS is applicable whether buyer is a end consumer or reseller.

Who will be liable to pay the TCS?

Saler who sale the goods is liable to pay the TDS, he will charge 1% TCS from the buyer and pay to the government.

What is the rate of TCS?

Rate of TCS is 1 % for all the goods and services.

From which date TCS is applicable?

Previously TCS is applicable on only gold sale in cash but now W.E.F 01/06/2016 TCS is applicable on all the goods and services.

What is the slab rate of TCS?

Gold and Jewellery Rs 2 laks
Cars and motor vehicle Rs 10 laks
Other goods and services Rs 2 laks

Exclusion of TCS?

If any transaction covered under TDS than TCS will not be applicable on it.

Must read our previous blog why pan card is necessary for purchase of sale of above Rs 2 laks.

Important update on the TCS –

CBDT has issued circular 23/2016 dt. 24 June 2016 on TCS

As per the circular TCS should be deducted on the cash portion only if payment received partly in cash and partly in banks, TCS will not be deducted on the cheque portion. E.g – If seller sales goods Rs 5 laks and Rs 3 laks has been received by cheque and Rs 2 laks by cash than TCS will not be applicable.

If the limit of TCS exceed Rs 2 laks than TCS will be applicable on total amounts. If seller sales goods Rs 5 laks and Rs 2 laks has been received by cheque and Rs 3 laks by cash than TCS will  be applicable on 3laks.

 

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62 comments

  1. KAPIL MALHOTRA

    Dear sir

    Please tell me if we purchased above 2 lakh and we paid all the payment through bank so tcs will be applicable or not.

  2. I have a doubt.
    Is it applicable to Single Invoice or Multiple Invoice ??
    For say, I have made three invoices in name of Mr. A, of less than 2 lacs each, and Mr. A pays me in CASH. then shall i liable to collect and pay TCS ?? all this takes place in single month.

    Thanks in advance for your effort and helping me in this matter

  3. whether TCS will be applicable if the customer deposits cash in my bank account?

  4. NITESH KUMAR KANOJIA

    HELLO SIR,

    IF WE SALE MOTOR VEHICLE MORE THEN 10 LAKH RUPEES TO BUYER WHO IS USE THAT VEHICLE IN PERSONAL CONSUMPTION NOT FOR RETAIL TRADE THEN TCS 1% APPLICABLE HARE?

  5. Is TCS applicable on job-work of hand-embroidery on handloom sarees? My clients deduct TDS on my behalf and I deduct TDS on behalf of my karigars.

    Thanks in advance

  6. If customer repairs his accidental vehicle under Insurance with the authorized workshop of Automobile Dealer, the total amount of Bill raised for Rs. 240000/-, out of which customer paid Rs. 20000 in cash and balance of Rs. 220000 was paid by Insurance Company after deducting TDS on Rs. 220000 directly to the Authorized Workshop.

    Whether TCS will be applicable and if Yes, then on what amount TCS to be collected by Authorized Workshop from customer?

  7. In case motor vehicle sold of value Rs. 11 Lakhs and amount of Rs. 20,000 received in cash. So under which section (i.e. under sub section 1 or sub section 1D of section 206C) TCS to be collected?

    Or whether liability to collect TCS arises under both sections?

  8. We are purchasing goods from farmer and we have to pay them in cash. So in this case whether it is applicable or not.

  9. If a person purchased goods worth of Rs. 5,00,000/- on 5th June 2016. Subsequently Paid Rs. 4,90,000/- By NEFT on 15th June and on 20th June paid the balance amount that is Rs.10,000 in cash. Will TCS applicable to it and if yes on what amount?

  10. my client is seller and while sending the materials he pays the freight payment in cash and get it reimbursed from party in cheque. Whether TCS applicable. sale bill is above 2 lakhs but freight bill is below 2 lakhs.

    and what if freight bill is above 2 lakhs

  11. Dear sir
    If A sell goods to B for amount Rs. 1 lk vide bill no 002, 1 lk vide bill no 007,1 lk vide bill no 021 in 2016-17.All receipts through cash.VAT invoice has issued to party.now here A is exempt to collectTCS from B as all invoices below 2 lk. But, here cash receipts in a year exceeds 2 lk (1+1+1=3 lk) in B account.Whether A has to collect tcs from B through this issue ?

  12. Whether we have to collect TCS @1% on the whole Invoice value or excluding the Taxes (ie., VAT, Service Tax and what ever the govt tax may be)
    TDS are deducted before service tax why not for TCS?

  13. As per definition of Buyer it should not apply on end use consumers

  14. If customer repairs his accidental vehicle in workshop and paid advance Rs. 10000/- and their bill closed at Rs. 250000/- on date 15/05/2016. Customer paid rest of amount in 1st June 2016. then TCS applicable or not ?

  15. Is tcs required to collect on motar car value of rs 5.00 lakh if mode of payment is in cash.

  16. Is it TCS will applicable on purchase of Cars Value below 10 Lacs on cash purchase?

  17. IF MR. A SALE GOODS TO MR. B AMOUNTING Rs 300000 P.A. BUT IN MULTIPLE BILLS(I.E. ALL BILLS ARE IN RANGE OF 40000-50000) AND MR B pays me in CASH AGAINST EACH BILL (I.E. CASH PAYMENT IS IN RANGE OF 40000-50000) THAN TCS WILL APPLICABLE OR NOT. OR IF APPLICABLE THEN HOW CAN WE CALCULATE IT PLEASE SPECIFY CALCULATIONS.

  18. In case if any buyer deposit “cash in my bank account” than we need to collect TCS or not??

  19. TCS APPLICABLE ON HOSPITALITY SERVICES ON NOT ?

  20. 2 lac in year or per bill invoice

  21. Cash Deposited in saving Account (For Exmp.-My Dad, My Brother, & Wife) So Sir please advice me .
    TCS Applicable or Not.

  22. Is tcs required to collect on motar car value of rs 3.00 lakh if mode of payment is in cash.

  23. We are rice manufacturer while selling goods we need to pay fright in cash.will TCS applicable on the same ?

  24. Sir if motor vehicle value 900000/- and buyer pays 100000/-by cash and rest amount through rtgs,b buyer need to pay the?

  25. दो लाख का पूरे साल मे माल लेने पर यह टैक्स देना है या एक बार माल लेने पर

  26. If patient admitted in hospital and took the treatment under medical Insurance through an empaneled Hospital under the Insurance Company, the total amount of Bill raised for Rs. 240000/- as hospital Expense , out of which customer paid Rs. 20000 in cash and balance of Rs. 220000 was paid by Insurance Company after deducting TDS on Rs. 220000 directly to the Hospital bank Account.

    Whether TCS will be applicable and if Yes, then on what amount TCS to be collected by The Hospital from Patient?

  27. As per new TCS provisions mentioned in para 149 of budget 2016 TCS is not appicable to Farmer & notified person if they provide the form. I have to know which form has to be get filled by farmers & notified persons?

  28. Is this applicable for transaction for more than 2 Lac in a year OR applicable for single Invoicing more than 2 Lac.
    And if single transaction of 2 lac then we will have to collect TCS 1% from the party and deposit the same in IT .And quartely filling for all cash transaction will be there what.

  29. I want to know, is tcs will applicable in the case – if a person has to pay total 700000/- amount out of which he pays part amount in cash say rs 199999/- & part amount 500001/- through bank.
    If applicable, then tcs will be calculated on the which amount?

  30. Sir if commercial motor vehicle value above Rs.2 lakhs and below Rs.6 lakhs , whether TCS applicable

  31. what will be position in case of country liquor dealer a wholesaler sales liquor suppose one invoice is Rs.500000/- and entire payments in cash and being country liquor deducts !% TCS NOW WILL AS PAYMENT IS IN CASH WHOLE SELLER WILL HAVE TO DEDUCT ONE MORE % OF TCS . that will 1% as country liquor sale plus 1% as cash payments total 2% will have to be deducted. PLEASE TELL WHAT SHOULD BE DONE.

  32. dear sir i have purchase something for amt of above 2 lakhs & seller had deducted my tcs then how i get back my deducted TCS amount

  33. RECENTLY WE SALED 2 VEHICLES FOR Rs. 5.5LACS. I RECEIVED 3LCAS AT MY BANK. BALANCE I RECEIVED IN CASH. TCS APPLICABLE OR NOT

  34. SSP . MATHIYALAGAN

    WE HAVE PURCHASED 1 SUV CAR FOR rS.1457000 THE COST OF THE VEHICLE BEFORE VAT IS 1260000, WHETHER THE TCS TO BE PAID ON BILL VALUE OR COST OF THE CAR BEFORE VAT AND ALSO I NEED WHETHER THE TCS TO BE PAID ON ENTIRE CAR COST OR AMOUNT EXCEEDING RS.10 LAKHS?

  35. Sir we sell goods in nepal and receive cash payments so will we b liable for tcs or any other tax regarding the new rule effective from 1/6/2016

  36. Sir
    I am a wholesale dealer of medicines.we sell medicines to retailer vide multiple billed not more than 20000 but the aggregate of bills in a financial year exceeds 2lac the consideration of which is made in cash. What forms and proceds we have to follow under TCS laws.

  37. C Kishore Kumar Reddy

    Does the TCS applicable on sale of exempted goods also, such as sale of feed supplements.

  38. I want to know, is tcs will applicable in the case ? – if a person has to pay total 700000/- amount out of which he pays part amount in cash say rs 199999/- & part amount 500001/- through bank.
    If applicable, then tcs will be calculated on the which amount?

  39. My client is a charitable trust running hospital. Whether hospital has to collect TCS from patient if cash payment of bill exceeds Rs. 2 lakh?
    If patient denied to give PAN then what to do? Form No. 60 can be filled up for it?

  40. we are iron and steel dealer. we supply material under more than one invoice to a party all valued more than Rs.2 lacs during a year. We receive part payment in cash amounting to less than rs.2 lacs against single invoice but during the year the total amount received in cash against different bills exceeds rs.2 lacs. Is TCS applicable? if yes, how to calculate TCS.

  41. sir,
    i m plastic lumps manufacturer, i sales lumps in cash bill. mr A party purchase lumps in cash so i give cash bill 19000. mr. A purchase lumps in month 18 time and i give bill rs. 19000 every time in month so can i come tcs 1% ?

  42. Hi All,

    please help to know TCS amount on below scenarios:

    if advance of Rs. 250000 in CASH taken and invoice generated of 230000 ?

    Scenario 1. 20k Refunded via NON CASH mode

    Scenerio 2. 20K refunded in CASH

    please share some official document based on above case, if any.

    Regards,
    Ishan

  43. respected sir/madam

    I HAVE A PROBLEM THAT SECTION 206 C OF INCOME TAX ACT 1961
    MY PROBLEM IS I ISSU A BILL OF RS. 438500 AN AGAINST BILL I RECEIVED THE WHOLE MONEY IN CASH IN DIFFERENT DATED IS LESS THAN 20000 EACH RECEIPT NOW PLS TELL THAT IN THOSE FIGURE TCS IS APPLICABLE OR NOT

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