TCS on sale of Cars

By | June 11, 2016
(Last Updated On: June 11, 2016)

TCS on sale of Cars

TCS on sale of Cars

Analysis of Provisions relating to TCS on sale of Cars/ Sale of Motor Vehicle above Rs 10 Lakh

  • section 206C of the Income Tax Act has been amended w.e.f 01.06.2016 to provide that the seller shall collect the tax at the rate of 1%  from the buyer on sale of motor vehicle of the value exceeding ten lakh rupees.
  • TCS at the rate of 1 %  on sale of Motor Vehicle is not applicable only to Luxury Cars it will apply on sale of any motor vehicle of the value exceeding Rs 10 Lakh.
  • Motor Vehicle has not been defined under the Income Tax Act .It is defined under section 2(28) of the Motor Vehicle Act, 1988 which reads as under :'”motor vehicle” or “vehicle” means any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has not been attached and a trailer; but does not include a vehicle running upon fixed rails or avehicle of a special type adapted for use only in a factory or in any other enclosed premises or a vehicle having less than four wheels fitted with engine capacity of not exceeding thirty five cubic centimetres.”
  • The seller for the purposes of collection of tax under section 206C shall be –

    (i) A Central Government or a state Government,

    (ii) Any local authority, or corporation or authority established under any Central, State or Provincial Act,

    (iii) Any company, firm or cooperative society,

    (iv) An individual or Hindu undivided family who is liable to audit as per provisions of section 44AB during the financial year immediately preceding the financial year in which the goods are sold or the services arc provided.

  • TCS on sale of car / any motor vehicle is to be collected from buyer .

    As per Explanation (aa) of Section 206C

    (aa) “buyer” with respect to—

    …….

    (ii) sub-section (1D) or sub-section (1F) means a person who obtains in any sale, goods of the nature specified in the said sub-section

  • TCS on sale of car / any motor vehicle shall not apply in case of sale to  Government, institutions notified under United Nations ( Privileges and Immunities) Act 1947, and Embassies, Consulates, High Commission, Legation, Commission and trade representation of a foreign State.
  • TCS on sale of car / any motor vehicle is applicable to each sale at the time of receipt of consideration and not to aggregate value of sale made during the year. This can be explained by way of an illustration:

    Illustration: Motor vehicle worth 20 lakh is sold and for which payments are made in instalments, one at the time of booking and the other at the time of delivery. At the time of booking 5 lakh rupees are paid and 15 lakh rupees are paid at the time of delivery. Tax at the rate of 1 % on 5 lakh rupees at the time of booking and at the rate of 1 % on remaining 15 lakh rupees at the time of delivery shall be collected at source.

  • TCS on sale of car / any motor vehicle is also  to be collected by  an individual who is liable to audit as per the provisions of section 44AB of the Act during the financial year immediately preceding the financial year in which the motor vehicle is sold.
  • TCS on sale of car / any motor vehicle is to be collected @ 1 % on sale consideration of a motor vehicle exceeding ten lakh rupees. whether part of the payment is made in cash and part is made by cheque , it does not make any difference as this provision is not dependent on mode of payment .
  • Section under which  TCS to be deducted on sale of car / any motor vehicle if payment is in cash is explained as follow :- 
    • Example- 1:- if the value of motor vehicle is 20 lakh rupees , out of which 5 lakh rupees has been paid in cash and balance amount by way of cheque, the tax shall be collected at source at the rate of 1 % on total sale consideration of 20 lakh rupees only under sub-section (1F) of section 206C of the Act.
    • Example -2 :-However, if a vehicle is sold for 8 lakh rupees and the consideration is paid in cash, tax shall be collected at source at the rate of 1 % on 8 lakh rupees as per sub-section(l D) of section 206C of the Act

 

Related Post

  1. TCS on sale of Motor Vehicle : CBDT clarify via FAQ
  2. TCS on Sale of motor Vehicle above Rs 10 Lakh w.e.f 01.06.2016
  3. FAQ’s on TCS on sale of Motor Vehicle
  4. TCS on Sale of Motor Vehicle above Rs 10 Lakh , Goods or Services in Cash above 2 Lakh
  5. TCS on cash sale of goods or services > Rs 2 Lakh wef 1.6.16
  6. e-TDS / TCS returns through e-filing portal https://incometaxindiaefiling.gov.in
  7. TCS Penalty as per Income tax Act
  8. TCS on Sale of Motor Vehicle above Rs 10 Lakh , Goods or Services in Cash above 2 Lakh
  9. Penalty deleted as the Assessee was not aware of TCS provisions
  10. TCS on sale of Imported Timber
  11. TCS Govt A/c : Revised time and mode of Payment
  12. TDS Rates and Limit revised w.e.f 01.06.2016
  13. TDS Statement Upload Online -Procedure
  14. TDS on Commission paid to agent for rendering services abroad
  15. No TDS on sum paid for services rendered outside india
  16. NO TDS on VSAT /lease line charges paid to NSE/BSE
  17. No tds on sale of agricultural land
  18. NO TDS on Service tax
  19. Not liable to Deduct TDS in case amendment with retrospective effect
  20. TDS can not be demanded from deductor if taxes paid by deductee : SC
  21. No TDS on leasehold rights payment for long period say 99 years
  22. Employer not liable to deduct TDS @ 20% for non furnishing of PAN by Employees
  23. No TDS on payment of transmission charges u/s 194J
  24. Payer not Liable to Deduct TDS if Payee income is exempt
  25. No TDS on Rent if declaration in 15G/15H w.e.f 01.06.2016
  26. No TDS on Service Tax Component of Rent
  27. No TDS on Provision of Interest u/s194A if provision reversed
  28. No TDs on interest on FDR made on direction of Courts :CBDT
  29. No TDS on Reimbursement Expenses if separate bills raised
  30. No TDS on Interest on FCCB issued to foreign investors and utilized for verseas business
  31. NO TDS liability under Section 195 if Book entry passed reversed Subsequently
  32. No TDS Under Secction 194LA as Land Acquired by Mutual negotiation and not compulsory acquisition
  33. No TDS under section 194LA if land owners surrendered their land to municipal corporation for under development right certificates scheme
  34. No TDS on Compensation paid to evacuate slum dwellers
  35. No TDS on purchase of negative rights of films
  36. Section 194I No TDS on Lease payment for allotment of plot for 80 years
  37. Purchase of software is not payment for royalty, not liable to TDS
  38. TDS on Purchase of Property : FAQ’s
  39. Assessee not to be called for TDS deducted but not Deposited by Deductor : CBDT
  40. Debenture Interest charged in Profit and Loss A/c but not paid would not attract TDS under Section 193
  41. Sum paid for internet connection not liable for TDS under section 194J
  42. Additional amount Paid to Purchaser on cancellation of Flat is not interest under section 2(28A) hence No TDS
  43. Period of default of TDS for Interest recovery is from date of deductibility till date of actual payment of tax
  44. CBDT clarify TDS issues on payments made by Television channels, Broadcasters and Newspapers
  45. TDS on Payment to Contractor : section 194C
  46. TDS Rates and Limit revised w.e.f 01.06.2016
  47. TDS on Payment to harvester / transporter of Sugarcane from Farmers field
  48. Payment to intermediaries for hiring of transport for carriage of goods is also liable for TDS u/s 194C
  49. Even in case of oral contract with transporters TDS is liable to be deducted u/s 194C
  50. Purchases made after payment of excise duty and availment of credit can not be held as job work, no TDS under section 194C
  51. TDS on Provision for Expenses
  52. Section 194C payments to newspaper publishers
  53. No TDS on Reimbursement Expenses if separate bills raised
  54. All About 26AS (TDS, Refund , AIR information )
  55. 40(a)(ia) TDS default based on opinion of CA was bona fide mistake , No Penalty
  56. section 40(a)(i) No TDS Disallowance if Expenses Capitalised
  57. section 40(a)(ia) Payer not liable for TDS default due to retrospective amendments
  58. 40(a)(ia) Disallowance for TDS default if books rejected by AO
  59. Apply for non deduction of TDS u/s 195 even if person was subjected to concealment penalty
Direct Taxes Ready ReckonerService Tax Ready ReckonerCompany Law Ready Reckonertax deduction at source
New Books Released on Tax , GST and law

Leave a Reply

Your email address will not be published. Required fields are marked *