Govt removes 1% tax on cash purchase above Rs 2 lakh
In the latest Budget, Finance Minister Arun Jaitley made cash transactions above Rs 2 lakh punishable by a fine of an equivalent amount.
New Delhi: The government has done away with the 1 percent tax on cash payments of over Rs 2 lakh for purchase of any goods or service after it banned cash dealings above that limit from 1 April.
Finance Minister Arun Jaitley, in his Budget for 2016-17, had provided for the seller to collect tax at the rate of 1 percent from the purchaser on sale in cash of any goods or offering any services exceeding Rs 2 lakh.
However, in the Budget 2017-18, presented last month, he brought in a new provision banning cash transaction above Rs 3 lakh. This cap was lowered to Rs 2 lakh through an amendment.
To reconcile the two provisions, the tax at source on goods and services, including jewellery, has now been removed through an amendment to the Finance Bill, 2017.
The amendment, along with other changes, were approved by the Lok Sabha yesterday.
The amendment scrapped sub-sections (1D) and (1E) from Section 206C with respect to TCS.
Official sources said Section 206C(1D) was inserted through the Finance Act, 2016, expanding the scope of Section 206C to include in its ambit cash-sale of goods and services exceeding Rs 2 lakh.
In the latest Budget, Jaitley made cash transactions above Rs 2 lakh punishable by a fine of an equivalent amount.
The fine is to be paid by receiver of cash.
The income tax department has been levying 1 percent TCS on cash purchase of bullion in excess of Rs 2 lakh and jewellery upwards of Rs 5 lakh since 1 July, 2012.
However, the Budget for 2016-17 had imposed TCS of 1 percent on goods and services purchased in cash over Rs 2 lakh.
The bracelets, each coated in 112 diamonds, will be sold together and are estimated to fetch between $2-4 million when they go under the hammer on 9 November.
According to official sources the I-T department is looking into a land deal between Sood's firm and a real estate company in Lucknow following complaints of alleged tax evasion
Of this, income tax refunds of Rs 16,373 crore have been issued in over 22.61 lakh cases and corporate tax refunds of Rs 51,029 crore have been issued in over 1.37 lakh cases