LEGAL
REQUIREMENTS UNDER INCOME TAX ACT WHEN SELLER OR SERVICE PROVIDER RECEIVED
CONSIDERATION MORE THAN Rs. 2 lakh.
1. TAX
COLLECTION AT SOURCE : With effect from 1st June, 2016, Finance Act 2016
has amended section 206C of the Income-tax Act to provide that the seller shall
collect tax at the rate of one per cent from the purchaser on sale in cash of
certain goods or provision of services exceeding two lakh rupees
Recently
CBDT clarify the following issue as regards applicability of the
provisions relating to levy of TCS
Question
1: Whether tax collection at source under section 206C(1D) at the rate of 1%
will apply in cases where the sale consideration received is partly in cash and
partly in cheque and the cash receipt is less than two lakh rupees.
Answer :
No. 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.
Illustration:
Goods worth Rs. 5 lakhs is sold for which the consideration amounting to Rs.4
lakhs has been received in cheque and Rs.1 lakh has been received in cash. As
the cash receipt does not exceed Rs.2 lakh, no tax is required to be collected
at source as per section 206C (1D).
Question
2: Whether tax collection at source under section 206C (1D) will apply only to
cash component or in respect of whole of sales consideration.
Answer:
Under 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.
Illustration:
Goods worth Rs. 5 lakhs is sold for which the consideration amounting to Rs.2
lakhs has been received in cheque and Rs.3 lakh has been received in cash. Tax
is required to be collected under section 206C (1 D) only on cash receipt of
Rs.3 lakhs and not on the whole of sales consideration of Rs.5 lakh.
2. PAN OF
THE PURCHASER/SERVICE RECIPIENT : When
seller/service provider receive consideration more than Rs. 2 Lakh either in
Cash or Cheque or by any other mode with effect from 1st
January, 2016 require to take PAN of the purchaser/service recipient.
The person
raising bill shall ensure after verification that PAN has been correctly
furnished and mentioned in the bill.
When PAN
is not available:
If PAN is
not available, a declaration in Form No. 60 should be taken from the
purchaser/recipient of service. If the seller/service provider is required to
get his account audited under section 44AB, then
Such
person shall furnish a statement in Form No. 61containing particulars of such
declaration through online transmission of electronic data and obtain an
acknowledgement number.
–
Such a person is required to retain Form No. 60 for a period of 6 years from
the end of the financial year in which the transaction is undertaken.
Place
where No. 61 file Form: – At Income
tax site after log-in through user id and password as file ITR.
Due date
for filing of Form No. 61: Two times in a year
30th
April: for declarations received till 31 st March
31st October:
for declarations received till 30th September
3.
Furnishing AIR information by seller/service provider :- A
statement of financial transaction (AIR) in Form No. 61A is to be submitted for
transactions recorded on or after April 1, 2016 (due date of submission
is May 31, 2017 for the financial year 2016-17). This rule is
applicable only if the seller/service provider is required to get his account audited
under section 44AB and such person receives for sale of goods/services to
any person cash payment (in aggregate from one or more transactions during
the financial year) exceeding Rs. 2 lakh,
In case of
sale of jewellery, it is Rs. 5 lakh.
PROCEDURE
FOR FILING ABOVE FORM
1ST
STEP : Go to e-filling portal of income tax
2nd
STEP : Log-in through user id as PAN number and password and date of birth
3rd
STEP : Go to my account and Manage ITDREIN and follow up next process
after chosen appropriate Form No.
- See more at:
http://taxguru.in/income-tax/income-tax-provisions-invoice-exceeds-rs-2-lakh.html#sthash.amKQorP8.dpuf
LEGAL REQUIREMENTS UNDER INCOME TAX ACT WHEN SELLER OR SERVICE PROVIDER RECEIVED CONSIDERATION MORE THAN Rs. 2 lakh.
1. TAX COLLECTION AT SOURCE : With effect from 1st
June, 2016, Finance Act 2016 has amended section 206C of the Income-tax
Act to provide that the seller shall collect tax at the rate of one per
cent from the purchaser on sale in cash of certain goods or provision
of services exceeding two lakh rupees
Recently CBDT clarify the following issue as regards applicability of the provisions relating to levy of TCS
Question
1: Whether tax collection at source under section 206C(1D) at the rate
of 1% will apply in cases where the sale consideration received is
partly in cash and partly in cheque and the cash receipt is less than
two lakh rupees.
Answer : No. 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.
Illustration:
Goods worth Rs. 5 lakhs is sold for which the consideration amounting
to Rs.4 lakhs has been received in cheque and Rs.1 lakh has been
received in cash. As the cash receipt does not exceed Rs.2 lakh, no tax
is required to be collected at source as per section 206C (1D).
Question
2: Whether tax collection at source under section 206C (1D) will apply
only to cash component or in respect of whole of sales consideration.
Answer:
Under 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.
Illustration:
Goods worth Rs. 5 lakhs is sold for which the consideration amounting to
Rs.2 lakhs has been received in cheque and Rs.3 lakh has been received
in cash. Tax is required to be collected under section 206C (1 D) only
on cash receipt of Rs.3 lakhs and not on the whole of sales
consideration of Rs.5 lakh.
2. PAN OF THE PURCHASER/SERVICE RECIPIENT : When seller/service provider receive consideration more than Rs. 2 Lakh either in Cash or Cheque or by any other mode with effect from 1st January, 2016 require to take PAN of the purchaser/service recipient.
The person raising bill shall ensure after verification that PAN has been correctly furnished and mentioned in the bill.
When PAN is not available:
If
PAN is not available, a declaration in Form No. 60 should be taken from
the purchaser/recipient of service. If the seller/service provider is
required to get his account audited under section 44AB, then
Such
person shall furnish a statement in Form No. 61containing particulars
of such declaration through online transmission of electronic data and
obtain an acknowledgement number.
–
Such a person is required to retain Form No. 60 for a period of 6 years
from the end of the financial year in which the transaction is
undertaken.
Place where No. 61 file Form: – At Income tax site after log-in through user id and password as file ITR.
Due date for filing of Form No. 61: Two times in a year
30th April: for declarations received till 31 st March
31st October: for declarations received till 30th September
3. Furnishing AIR information by seller/service provider :- A statement of financial transaction (AIR) in Form No. 61A is to be submitted for transactions recorded on or after April 1, 2016 (due date of submission is May 31, 2017 for the financial year 2016-17). This rule is applicable only if the seller/service provider is required to get his account audited under section 44AB and such person receives for sale of goods/services to any person cash payment (in aggregate from one or more transactions during the financial year) exceeding Rs. 2 lakh,
In case of sale of jewellery, it is Rs. 5 lakh.
PROCEDURE FOR FILING ABOVE FORM
1ST STEP : Go to e-filling portal of income tax
2nd STEP : Log-in through user id as PAN number and password and date of birth
3rd STEP : Go to my account and Manage ITDREIN and follow up next process after chosen appropriate Form No.
- See more at: http://taxguru.in/income-tax/income-tax-provisions-invoice-exceeds-rs-2-lakh.html#sthash.amKQorP8.dpuf
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