Pay 1% tax on cash purchase of goods, services over Rs 2 lakh

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

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

The existing TCS of 1 per cent 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 per cent 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 per cent 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 per cent from Wednesday. Currently, STT is 0.017 per cent.

In the Budget speech, Jaitley had said: "I also propose to collect tax at source at the rate of 1 per cent 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."