Section 206C of The Income Tax Act,1961 amended by the Finance Act, 2016. And the amended bought in by the Finance Act, 2016 are applicable from 1st June, 2016. The section is amended in order to reduce the cash transactions in the sale of goods and services. And this is done to control the flow of black money in the markets.
Earlier the section provided that “the seller shall collect tax at source at specified rate from the buyer at the time of sale of specified items such as alcoholic liquor for human consumption, tender leaves, mineral being coal or lignite or iron ore etc.” There was a clear statement that tax collected at source at the specified rate is to be collected at 1% on the sale of bullion exceeding Rs. Two lakhs and jewellery exceeding Rs. Five Lakhs.
Finance Act, 2016 has broaden the area of section 206C(1D) according to the amendment the seller has to collect TCS at the rate of one percent from the seller on the sale in cash of any goods or services exceeding Rs. 2,00,000.00. But this amendment doesnot apply to the sale of bullions and jewellery. In the case of bullions and jewellery, the provisions prior to the amendment shall be in existence.
In addition to this, the government has further considered high value transactions and bought them within the tax nets. And this has been provided in 206C(1F) of the Act, as it states the seller who receives consideration for sale of a motor vehicle exceeding Rs. Ten lakh, shall collect one percent of sale consideration as tax from the buyers.
Author-Ms Kirtika Tolani