Pay 1% tax on cash purchase of goods and services over Rs. 2 Lakh

Payment in cash for buying goods and services worth more than Rs 2 lakh with the exception of jewellery will attract 1 percent tax collected at source (TCS) from Wednesday.

existing TCS of 1 percent on cash purchase of over Rs 5 lakh of jewellery and over Rs 2 lakh of bullion will continue, tax officials said.

The Income Tax Department has been levying 1 percent TCS on cash purchase of bullion in excess of Rs 2 lakh and jewellery in excess of Rs 5 lakh since July 1, 2012.

The position is maintained and there is no change in the position, the officials said.

Finance Minister Arun Jaitley in his Budget 2016-17 imposed TCS of one percent on goods and services purchased in cash in excess of Rs 2 lakh.

Besides, sale of options will also attract increased Securities Transaction Tax (STT) of 0.05 percent from tomorrow. Currently, STT is 0.017 percent.

In the Budget speech, Jaitley had said: “I also propose to collect tax at source at the rate of 1 percent on purchase of luxury cars exceeding value of Rs 10 lakh and purchase of goods and services in cash exceeding Rs 2 lakh.”

“For compliant tax payers with resources, this levy not only advances collection of tax when the expenditure is incurred, but it provides data to tax authorities to identify the persons who incur such expenditure, but may be missing from the tax base.”