Embassies, UN Bodies, Govt Departments Exempted From 1% TCS on Cash Buy

Government department, embassies, consulates and UN bodies will be among those exempted from the levy of 1 per cent tax collection at source (TCS) on cash purchases of above Rs 2 lakh, CBDT said today.The government has introduced 1 per cent TCS on purchase of goods and services in cash exceeding Rs 2 lakh with effect from June 1.

The Central Board of Direct Taxes (CBDT) has notified the classes of buyers on whom the TCS provisions will not apply. "The provisions of sub-section 1(D) of Section 206C in relation to sale of any goods (other than bullion or jewellery) or providing any service shall not apply to the following classes of buyers -- Government; embassies, Consulates, High Commissions, Legation or Commission and trade representation of a foreign State; and institutions notified under United Nations (Privileges and Immunities) Act, 1947," CBDT said.

Section 206C (1D) provides that the seller collect tax at the rate of 1 per cent from the purchaser on sale in cash of any goods (other than bullion and jewellery) or providing of any services exceeding Rs 2 lakh. As regards bullion and jewellery, 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 Budget 2016-17 had also introduced 1 per cent TCS on sale of all motor vehicles, regardless of whether these are luxury cars or not, that cost over Rs 10 lakh from June 1. The tax department had then clarified the levy will not apply to purchase of such vehicles by government departments, institutions notified under the UN privileges Act and High Commissions and Embassies.