As per the provisions of Section 206C, tax is required to be collected at source by the seller at the specified rate on certain goods like alcoholic liquor, tendu leaves, scrap etc. at the time of sale of such good. This is done in order to collect tax at the earliest point of time and to ensure more transparency in the system.
■ Under the existing provisions of the ITA, tax is required to be collected at source by the seller, at the specified rates, from the buyer of certain goods like alcoholic liquor, tendu leaves, scrap etc.
■ Such tax has to be collected at the time of debiting of the amount receivable from the buyer or at the time of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier.
Finance Bill 2012 proposes the following Amendments in Section 206C of ITA (w.e.f 1 July 2012):
1. TCS on sale of certain minerals:
■ It is proposed that TCS provisions shall be made applicable on sale of minerals being coal or lignite or iron ore at the rate of 1%. In other words, seller of minerals being coal or lignite or iron ore shall be required to collect TCS @1% at the time of debiting the amount receivable from the buyer or at the time of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier
However, the seller shall not collect tax on sale of the said minerals if the same are purchased by the buyer for personal consumption.
2. TCS on cash sale of bullion and jewellery [Sub-section (1D) to Section 206C]
■ It has been proposed that the seller of bullion and jewellery shall, at the time of receipt of such amount in cash, collect tax at the rate of 1% of sale consideration from every buyer of bullion and jewellery, if sale consideration exceeds two lakh rupees.
■ Any person collecting any amount under this sub-section shall also pay within the prescribed time the amount so collected to the credit of the Central Government or as the Board directs
■ "jewellery" shall have the meaning assigned to it in the Explanation to sub-clause (ii) of clause (14) of section 2
■ As per Memorandum Explaining the provisions of Finance Bill 2012, this amendment is being proposed to reduce the quantum of cash transaction in bullion and jewellery sector and for curbing the flow of unaccounted money in the trading system of bullion and jewellery. It is further provided in the Memorandum that the provisions of TCS would apply irrespective of the fact whether buyer is a manufacturer, trader or purchase is for personal use.
3. A proviso to Sub-section (6A) has been inserted in the proposed Finance Bill that any person (other than a person required to collect tax on cash sale of bullion and jewellery) responsible for collecting tax, who fails to collect the whole or any part of the tax on the amount received from a buyer shall not be deemed to be an assessee in default in respect of such tax if such buyer—
a. has furnished his return of income under section 139;
b. has taken into account such amount for computing income in such return of income; and
c. has paid the tax due on the income declared by him in such return of income,
and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed.
"accountant" shall have the meaning assigned to it in the Explanation to sub-section (2) of section 288;
4. A proviso to Sub-section (7) has been inserted to the effect that in case any person (other than a person required to collect tax on cash sale of bullion and jewellery) who fails to collect the whole or any part of the tax but is not deemed to be an assessee in default under the first proviso of sub-section (6A), the interest shall be payable from the date on which such tax was collectible to the date of furnishing of return of income by such buyer.
1. Mining sector is an important segment of Indian economy but the trading of minerals remained largely unregulated resulting in non-reporting or under-reporting of trading in minerals trading transactions for the taxation purpose.
The proposed amendment with respect to Tax collected on sale of certain minerals has been proposed in order to collect tax at the earliest point of time and also to improve reporting mechanism of transactions in mining sector.
2. The insertion with respect to Tax collected on sale of bullion and jewellery has been proposed in order to curb the rampant use of unaccounted money in bullion and jewellery sector. The proposed amendment would result in checking the use of unaccounted money in this sector and result in adequate reporting and minimizing of tax evasion.