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Purchase of Jewellery above Rs. 2 lakhs in Cash will attract 1% TCS from April 1st

Jewellers

According to recently introduced Finance Bill, 2017, Cash purchases of jewellery exceeds 2 lakhs will attract 1 per cent Tax Collection at Source (TCS) from April 1st. Currently the limit of cash purchase is Rs. 5 lakh.

The bill likely to be passed in the second part of Budget Session. Once the Finance Bill 2017 is passed, jewellery will be treated on par with general goods which attract 1 per cent TCS on cash purchase of above Rs. 2 lakh.

In the Finance Bill 2017, Clause (ii) of sub-section (1D) of the said section provides for tax collection at source at the rate of one per cent. of sale consideration on cash sale of jewellery exceeding five lakh rupees. It is proposed to omit the said clause in view of restriction on cash transactions as proposed to be provided under section 269ST.

The proposed amendment is consequential to the insertion of a new section 269ST in the Income-tax Act.

However, there is no special provision for TCS on its purchase, jewellery is now being clubbed in general ‘goods’ on which 1 per cent TCS is triggered if a single transaction exceeds Rs. 2 lakh in cash.

Currently, Section 206C sub section (1D) of Income Tax Act, 1961 provides for a seller collecting from the buyer 1 per cent of sale consideration as income tax if the amount paid for bullion exceeds Rs. 2 lakh in cash and for jewellery if it exceeds Rs. 5 lakh in cash.

The same section also provides for 1 per cent TCS on cash paid in excess of Rs. 2 lakh for any goods other then bullion and jewellery.

With the amendment proposed in the Finance Bill 2017, jewellery purchase of over Rs. 5 lakh in cash is being omitted from the ambit of TCS but will now be classified as “other goods” and the 1 per cent levy be provided if cash consideration is over Rs. 2 lakh.

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