Tcs @ 1% under section 206

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ARUN KUMAR GARG (Querist)
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04 June 2016 Q. whether Limit of Rs/- 2.00 Lakhs for deducting TCS @ 1% on cash transaction is for per bill above Rs/- 2.00 Lakh or it is for total cash bills for in particular financial year.

Nirav Kansagara

Nirav Kansagara (Expert)
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05 June 2016 Dear Arun, below are clarification hope you can find your answer.

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.

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.

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.

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.

Example
MR Arun purchases goods from distributor for Rs. 8.00 lac on 10.06.2016, payment of Rs. 795000/- has been made by cheque 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 Arun is dealer in goods or Arun purchased for his personal consumption.

In Short, 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