The Central Board of Direct Taxes (CBDT) has clarified that the 1 per cent tax collected at source (TCS) on sale consideration received in cash will not be levied if the cash received does not exceed Rs 2 Lakh even if the total sale consideration exceeds Rs 2 Lakhs.
It has also clarified that TCS to be collected by the seller from the buyer is required to be collected only on the cash component of the sale consideration and not on whole of the sale consideration.
Finance Minister Arun Jaitley in his Budget 2016-17 had imposed TCS of one per cent on goods and services purchased in cash in excess of Rs 2 lakh. The move was aimed at curbing cash transactions in the system.
After the present clarification, in a trasaction of Rs 4 Lakh if Rs 2.5 lakh has been paid in cash, TCS of 1 per cent would apply only on Rs 2.5 lakh and not on the entire Rs 4 Lakh.