TCS on Cash Sales

Finance Act, 2016 imposed TCS on cash Sales i.e on cash sale of goods or services  with effect from 1-6-2016. Finance Act 2016 has made the amendments in section 206C( 1D) of the Act :

 [ Related post Higher Tax Rate for not giving PAN by Collectee for TCS w.e.f 01.04.2017 ]

 [ No TCS on Cash Sale of Goods or Services or Jewellery w.e.f 01.04.2017 ]

  Section 206C(1D) of Income Tax act imposing TCS on cash sales is as follow :-

Every person, being a seller, who receives any amount in cash as consideration for sale of bullion  or jewellery or any other goods (other than bullion or jewellery) or providing any service shall, at the time of receipt of such amount in cash, collect from the buyer, a sum equal to one per cent of sale consideration as income-tax, if such consideration,—

 (i) for bullion, exceeds two hundred thousand rupees; or

(ii) for jewellery, exceeds five hundred thousand rupees or

(iii) for any goods, other than those referred to in clauses (i) and (ii), or any service, exceeds two hundred thousand rupees

Provided that no tax shall be collected at source under this sub-section on any amount on which tax has been deducted by the payer under Chapter XVII-B

Key features of TCS on Cash sales i.e on cash sale of goods or services :

• TCS on Cash sales i.e on cash sale of goods or services to be collected by seller. Seller means “the Central Government, a State Government or any local authority or corporation or authority established by or under a Central, State or Provincial Act, or any company or firm or co-operative society and also includes an individual or a Hindu undivided family whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which the goods are sold or services  are provided.
• TCS on Cash sales i.e on cash sale of goods or services to be collected from buyer . Buyer means for section 206C((1D) and Section 206(1F) , means a person who obtains in any sale, goods of the nature specified in the said sub-section;
• TCS on Cash sales i.e on cash sale of goods or services @  1% of sale consideration to be collected by seller from buyer on
  • Sale of Bullion (if sale consideration is more than Rs 2 Lakh in single bill )
  • Sale of Jewellery (if sale consideration is more than Rs 5 Lakh in single bill )
  • Other goods or services (if sale consideration is more than Rs 2 Lakh in single bill)
• TCS on Cash sales i.e on cash sale of goods or services @  1% of sale consideration to be collected by seller from buyer on  even if part of such consideration  amount is received in cash

e.g Mr. A sells goods to Mr. B worth Rs. 5,50,000 (Invoice Value) on 2.06.2016 and receives Rs. 4,90,000 by cheque on 2.06.2016 and Rs. 60,000 by cash on 03.06.2016, Mr. A requires to collect TCS @ 1% on Rs. 5,50,000.

• The seller will collect TCS on Cash sales i.e on cash sale of goods or services @  1% of sale consideration
• The seller will collect TCS on Cash sales i.e on cash sale of goods or services, if sale is made or service is rendered w.e.f 01.06.2016
• TCS on Cash sales i.e on cash sale of goods or services will be collected at the time of receipt of any amount in cash.
• If multiple bills are issued to  single party each less than 2 Lac, then any amount collected in cash will not be liable to TCS.
• This Rule will be applicable irrespective of the fact whether the buyer is a manufacturer, trader or the purchase is for personal use. However, the purchaser can obtain a lower TCS certificate by submitting Form No. 13 to the Assessing Officer.
• The seller will not be obliged to collect TCS on Cash sales i.e on cash sale of goods or services, if the buyer has deducted the tax at source from the payment.( this may be in the case services are rendered and person receiving the services has deducted the TDS before making the payment in cash to the provider of services )
• Seller/service provider is required to take PAN of the purchaser/recipient of service.The person raising bill shall ensure after verification that PAN has been correctly furnished and mentioned in the bill. Even if no PAN is provided by the Purchaser, TCS @ 1% to be collected , but a declaration in Form No. 60 should be taken from the purchaser/recipient of service.Such a person is required to retain Form No. 60 for a period of 6 years from the end of the financial year in which the transaction is undertaken. (Note : the Provisions of non furnishing of PAN and deduction of TDS @ 20% are applicable for Chapter XVIIB but Section 206(1d) is covered in Chapter XVIIBB)
• Form 61 statement (giving details of all Form 60 obtained in a Half Year), is required to furnished electronically by seller (only where audit of seller is required  u/s 44AB -including audit for presumptive taxation)
  •  For declarations received till 31st March :- Form 61 is required to be filed by 30th April and
  •  For declarations received till 31st October : Form 61 is required to be filed by 30th September.
• TCS on Cash sales i.e on cash sale of goods or services collected from buyer shall be deposited within 7 days from the close of month of collection to the credit of the Central Government.
• Seller shall submit Quarterly statement in Form 27EQ within following due dates

Quarter of the financial year ended       Due Date

30th June                                                              15th July of the financial year

30th September                                                    15th October of the financial year

31st December                                                       15th January of the financial year

31st March                                                               15th May of the financial year

                                                                                      immediately following the financial                                                                                                       year in which collection is made

• The seller will furnish certificate to the buyer in Form 27D by following due date stating that tax has been collected, and specifying the sum so collected, the rate at which the tax has been collected..

Quarter of the financial year ended      Due date

30th June                                                 30th July of the financial year

30th September                                       30th October of the financial year

31st December                                          30th January of the financial year

31st March                                                30th May of the financial year immediately following the

                                                                    financial year in which collection is made

• TCS on Cash sales i.e on cash sale of goods or services , thus even if hospitals / doctors receive payments from patients in cash for services rendered exceeding Rs 2 Lakh, they have to collect TCS from patients.

• TCS on Cash sales i.e on cash sale of goods or services even if buyer buys goods for his personal consumption

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