The TCS amendments in Budget 2016 are described below in detail. The Finance Act, 2016 has affected new changes w.e.f 1st June 2016. Read the complete article to check about TCS on Sale of Motor Vehicles, TCS on Gold, TCS rate chart, etc.
TCS Amendments in Union Budget 2016
There are some amendments made to Tax Collected at Source in Union Budget 2016. Union Budget 2016 has affected New Provisions / changes w.e.f 1st June 2016 in respect of TCS on Sale of goods and services in cash and Sale of Bullion, Jewellery, Motor vehicle. TCS Amendments under section 206C (1D) are as follows.
Every seller who receives any amount in cash as consideration for sale of jewellery or bullion or any other goods (except jewellery or bullion) or providing any service shall, at the time of receipt of such amount in cash, collect from the buyer, a sum equal to 1% of sale consideration as income tax, if such consideration,
- for bullion, exceeds Rs. 2,00,000 or
- for jewellery, exceeds Rs. 5,00,000 or
- for any goods, other than those referred to in clauses (i) and (ii), or any service, exceeds Rs. 2,00,000.
As per TCS amendments, it is also provided that no tax shall be collected at source (no TCS) under this sub-section (1D) on any amount on which tax has been deducted by the payer under Chapter XVII-B.
Changes / Amendments in TCS w.e.f 1st June 2016
In order to restrain the flow of unaccounted money in the trading system and to bring high-value transactions within the tax net and reduce the quantum of cash transaction in sale of goods and services, it is proposed to amend the Section 206C of IT Act, 1961. This amendment is made to provide that the seller shall collect the tax at the rate of 1% (i.e. 1% of sale value) from the purchaser on
- Sale of motor vehicle of the value more than Rs. 10 lakh (Where amount is received by cheque, cash, or any other mode); or
- Sale in cash of any goods (except bullion & jewellery), or providing any services (except payments on which tax is deducted at source (TDS) under Chapter XVII-B) more than Rs. 2 Lakh (Amount of consideration is received in cash or partly in cash).
TCS on Sale of Motor Vehicles
The Section 206C is amended to provide that the seller/collector shall collect the tax @ 1% from the purchaser/buyer on sale of motor vehicle of the value exceeding Rs. 10 Lakh and sale in cash of any goods (except bullion and jewellery), or providing any services (except payments on which tax is deducted at source (TDS) under Chapter XVII-B) exceeding Rs. 2 Lakh.
In order to bring high-value transactions within the tax net and reduce the quantum of cash transaction in sale of goods and services, section 206C has been amended to provide that the seller/collector shall collect the tax @ 1% from the buyer on sale of motor vehicle of the value more than Rs. 10 Lakhs. This TCS amendment is made to cover all transactions of retail sales and correspondingly it will not apply to the sale of motor vehicles by manufacturers to distributors/dealers.
This TCS on Sale of Motor Vehicles is not only applicable for Luxury Cars, it is applicable for any Motor Vehicle. It is applicable to each sale of Motor Vehicle and not to aggregate value of the sale of Motor Vehicles made during the year.
TCS on Gold w.e.f June 1, 2015
TCS amendments also affected the Gold Tax in India. The Indian government had announced the levy of 1% TCS (Tax Collected at Source) on cash transactions over Rs. 2,00,000 to buy gold jewellery. This is one of the measures to check and bring down black money in the system. On such issue, jewellers across India shut their shops and took to the streets to strike which lasted for approximately 45 days.
This TCS of 1% on Gold Jewellery applies from 1st June 2016 only on cash purchases of jewels and gold in excess of the Rs. 5 lakh threshold.
The industry has welcomed the decision to roll back at least the TCS on gold purchases over Rs. 2,00,000. Instead, the TCS (Tax Collected at Source) will be applicable for cash transactions over Rs. 5,00,000 as it was earlier.
Because of this government’s decision to roll back at least the TCS on gold purchases over Rs. 2,00,000, many of the people are commenting that the decision was a huge relief for the people who looking to buy wedding jewellery as Rs. 2,00,000 is a very small amount. Gold demand in India has been faltering (lose strength) for some time now. Initially, it was the high prices of gold that kept buyers at bay and later it was the imposition of the 1% TCS on non-silver jewellery.
TCS Rate Chart for AY 2016-17 (FY 2015-16)
The TCS Rates as per Assessment Year 2016-17 (Financial Year 2015-16) are as follows. This rate chart is as per the TCS Amendments in Budget 2016. The TCS rate for Scrap is 1%, 5% for Tendu leaves, 2.5% for Timber obtained under a forest lease or other mode, 2.5% for Any other forest produce not being a Timber or tendu leave, 1% for Alcoholic Liquor for Human Consumption, 2% for Packing lot, toll plaza, mining & quarrying, etc.
|Section||Nature of Payment||Threshold Limit of Payment||TCS Rates for FY 2015-16 (AY 2016-17)|
|206C||Timber obtained under a forest lease or other mode||–||2.50%|
|206C||Any other forest produce not being a Timber or tendu leave||–||2.50%|
|206C||Alcoholic Liquor for Human Consumption||–||1%|
|206C||Packing lot, toll plaza, mining & quarrying||–||2%|
|206C||Purchase of Bullion/ Jewellery in cash||Rs. 2 Lakh per transaction (Bullion)Rs. 5 Lakh per transaction (Jewellery)||1%|
|206C||Purchase of coal lignite, Iron ore by a trader||–||1%|
Surcharges & Education Cess
|Type of Payment||Surcharge Rate||Education Cess (3%)|
|Salary (Resident and Non- resident)||Upto 1 Crore||Nil||Yes|
|More than 1 Crore||10%|
|Other Payments to Residents||No||Nil||No|
|Other Payments to Non-Residents|
|Payment to Non-Residents (except Companies)||Upto 1cr||Nil||Yes|
|More than 1 Crore||10%|
|Payments to Foreign Companies||Upto 1cr||Nil||Yes|
|More than 1 Crore||2%|
|More than 10 Crores||5%|
Late Fees and Penalties of TCS
The late fees and penalties of TCS / TCS return are as follows. Check the fees and penalties for late filing under section 234E & Section 271H(1)(a) or providing incorrect information in TCS/TDS return under section 271H(1) (b).
|Section 234E||Fee for late filing of TCS/ TCS return||Rs. 200 per day (not exceeding amount of tax)|
|Section 271H(1) (a)||Penalty for Late filing of TCS/ TCS return beyond 1 year||Minimum Penalty : Rs. 10,000
Maximum Penalty : Rs. 1 Lakh
|Section 271H(1) (b)||Penalty for providing incorrect information in TDS / TCS Return||Minimum Penalty : Rs. 10,000
Maximum Penalty : Rs. 1 Lakh