No TCS if the Cash receipt does not exceed 2Lac; CBDT issues clarification to Amendment in Section 206C of the Income Tax Act

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The Central Board of Direct Taxes(CBDT) has issued a clarification regarding Amendment in Section 206C of the Income Tax Act vide Finance Act 2016.

Through the Finance Act 2016, Central Government has amended Section 206C of the Income Tax Act to provide the seller shall collect tax at the rate of one percent from the purchaser on sale in cash of certain goods or provision of services exceeding two lakh rupees, CBDT has said.

The circular, which has come in the form of ‘frequently asked questions’ (FAQs), also made it clear that Tax Collection at source will not be levied if the cash receipt does not exceed two lakh rupees even if the sale consideration exceeds two lakh rupees.

Under the Section 206C (1D), the tax is required to be collected at source on cash component of the sales consideration and not on the whole of sales consideration, CBDT also added in the clarification.

Read the full text of the clarification below.