TCS on sale of goods & services

Written by G.S.S.V. & Associates on . Posted in Latest News, Recent Articles, What's New

TCS on sale of Goods or services


In order to reduce the quantum of cash transaction in sale of any goods and services and for curbing the flow of unaccounted money in the trading system and to bring high value transactions within the tax net, With effect from 01.06.2016, Every person, being a seller, who receives any amount in cash as consideration for sale of any goods  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. Earlier, TCS @ 1% on cash purchase of over Rs.5,00,000/- on sale of Jewellery and for over Rs.2,00,000/- of Bullion was required to be collected and deposited.

(Section 206(ID))


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.]


Thus, wherever, a seller is selling any goods for value exceeding Rs.2,00,000/- (other than Jewellery, for which the limit is Rs.5,00,000/-) shall collect from Buyer TCS @ 1%, wherever, the consideration is to be received in cash. The amount is to charged from Buyer , the way Vat, service tax etc is being charged. To illustrate, a seller selling goods worth Rs.1,00,000/-, subject to vat @ 5% , shall raise bill as :-


Sale of Goods                                                                                                    Rs.1,00,000/-

Add : Vat @ 5%                                                                                                 Rs.     5,000/-

Add : TCS @ 1%                                                                                                 Rs.     1,000/-

Total                                                                                                                      Rs.1,06,000/-


For the purpose of TCS on sale of any goods or services ,u/s 206(ID) seller means :-

a)      Central Government,

b)      a State Government or

c)       any local authority or corporation or authority established by or under a Central, State or Provincial Act, or

d)      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 of the nature specified in the Table in sub-section (1) or sub-section (1D) are sold 2[or services referred to in sub-section (1D) are provided].

For the purpose of TCS on sale of any goods or services u/s 206(ID) Buyer means a person who obtains in any sale, goods of the nature specified in the said sub-section.

TCS on sale of Motor Vehicles of the value exceeding Rs.10,00,000/-

With effect from 01.06.2016, a newly inserted section section 206(1F) provides that Every person, being a seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding ten lakh rupees, shall, at the time of receipt of such amount, collect from the buyer, a sum equal to one per cent of the sale consideration as income-tax.

It may be noted that as against the tcs on sale of goods/services u/s 206(ID), tcs on sale of Vehicle is applicable on sale of all vehicle , irrespective of the mode of payment. Thus, TCS on sale of vehicle is to be charged , even if mode of payment is cash, cheque, draft, pay order, neft, rtgs etc)

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