TCS levy not applicable when cash payment for certain goods, services is less than Rs 2 lakh: CBDT

New Delhi, June 27 (KNN) The Tax Collected at Source (TCS) levy will not be applicable when cash part of the payment for certain goods or services is less than Rs 2 lakh, even when the total payment is more than this amount, CBDT said.

In a new circular issued, CBDT clarifies that as announced in the Budget, where the sale consideration received is partly in cash and partly in cheque. "TCS will not be levied if the cash receipt does not exceed Rs two lakh even if the sale consideration exceeds Rs two lakh.”

Citing an example, it said, that in a case where a good worth Rs 5 lakh is sold for which the consideration amounting to Rs 4 lakh 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)," it said.

The circular added that TCS is "required to be collected at source on cash component of the sales consideration and not on the whole of sales consideration".