According to a PTI report: Once the Finance Bill 2017 is passed, jewellery will be treated on par with general goods which attract 1 per cent TCS on cash purchase of above Rs 2 lakh.
The Bill seeks to do away with the threshold of Rs 5 lakh on jewellery purchases for applicability of TCS because the Union Budget 2017-18 has proposed to ban cash dealings of over Rs 3 lakh and make violations punishable with a penalty of an equivalent amount to be paid by person receiving the cash.
However, as there is no special provision for TCS on its purchase, jewellery is now being clubbed in general ‘goods’ on which 1 per cent TCS is triggered if a single transaction exceeds Rs 2 lakh in cash.
In a bid to check generation of black money through large transactions, after the Budget proposal to scrap the previous threshold of Rs 5 lakh is approved by Parliament.
“The Income-tax Act provides for 1 per cent TCS on cash purchase of goods or services above Rs 2 lakh. The definition of goods also includes jewellery and hence 1 per cent TCS would be applicable on jewellery purchased above Rs 2 lakh in cash,” an official was quoted by PTI as saying.
With this move, the TCS threshold for jewellery will be brought at par with that of bullion from April 1.
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.
However, the Budget for 2016-17 had imposed TCS of 1 per cent on goods and services purchased in cash over Rs 2 lakh.
The Finance Bill 2017 states that current provisions provide for “tax collection at source at the rate of one per cent of sale consideration on cash sale of jewellery exceeding Rs five lakh. It is proposed to omit the said clause in view of restriction on cash transactions as proposed to be provided”.
Presently, Section 206C sub section (1D) of Income Tax Act, 1961 provides for a seller collecting from the buyer 1 per cent of sale consideration as income tax if the amount paid for bullion exceeds Rs 2 lakh in cash and for jewellery if it exceeds Rs 5 lakh in cash.
The same section also provides for 1 per cent TCS on cash paid in excess of Rs 2 lakh for any goods other then bullion and jewellery.
With the amendment proposed in the Finance Bill 2017, jewellery purchase of over Rs 5 lakh in cash is being omitted from the ambit of TCS but will now be classified as “other goods” and the 1 per cent levy be provided if cash consideration is over Rs 2 lakh.