Section 206C(1E) of the Income Tax Act, 1961 requires collection of tax at source (TCS) on high-value cash receipts arising from the sale of goods or provision of services. The provision applies when the cash portion of a transaction exceeds the prescribed threshold, irrespective of the total invoice value or mode of payment for the remaining amount.
Applicability of Section 206C(1E)
This provision applies when a seller or service provider receives more than ₹2,00,000 in cash from a single buyer or recipient in one day. The threshold is based solely on the cash portion of the transaction, regardless of the total invoice amount or payment received through other modes.
| Collection Codes under section 206C | Nature of Transaction | When TCS Applies | TCS Rate |
| M | Sale of goods (excluding bullion) | TCS is applicable when cash receipts exceed ₹2,00,000 in a single day from a single buyer, irrespective of total invoice value or other non-cash components. Applies to all goods except bullion. | 1% |
| N | Provision of services (not covered under Chapter XVII-B) | TCS is applicable when cash receipts exceed ₹2,00,000 in a single day from a single recipient for services that are not subject to TDS under Chapter XVII-B. Applies even if part of the amount is paid by other means. | 1% |
Responsibility to Collect TCS
The responsibility to collect TCS lies with the seller of goods or the provider of services who receives the cash. The section applies irrespective of the seller’s turnover or the nature of business. There are no exemptions based on the category of seller.
Exclusions from Applicability
This section does not apply to:
- Receipts through banking channels (cheque, demand draft, electronic transfer)
- Sale of bullion (covered under Section 206C(1))
- Services already covered under TDS provisions in Chapter XVII-B
- Cash receipts that do not exceed ₹2,00,000 in one day from a single buyers