TIL Desk/Business/New Delhi-Cash purchases of jewellery will attract 1 per cent TCS (tax collected at source) from April 1 if the amount exceeds Rs 2 lakh, as against the current threshold of Rs 5 lakh. 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 said.
