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TCS on Motor Vehicles – Income tax Act 1961

TCS on Motor Vehicles – Income tax Act 1961. In this article we are going to provide information about TCS (Tax Collected at Source) on Motor Vehicles. This tax is payable by the seller who collects in turn from the lessee or buyer. The goods are as specified under section 206C of the Income Tax Act, 1961. So, have a look at clear information about TCS on Motor Vehicles from below.

TCS on Motor Vehicles

Every person, being a seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding ten lakh rupees, shall at the time of receipt of such amount, collect from the buyer, a sum equal to one percent of the sale consideration as income tax.

In the earlier provision TCS was only collected on tendu leaves, scrap, jwellery, bullion, parking In recent years, the scope of TCS is being extended in an effort to curb tax evasion and black money transactions. In 2012, certain transactions affecting customers—receipts in cash, for sale of bullion exceeding Rs.2 lakh, and of jewellery exceeding Rs.5 lakh—was brought within its ambit. In this Budget, from 1 June 2016,  The transactions are sale of a motor vehicle of value exceeding Rs.10 lakh, and receipt of money for sale of goods or provision of services exceeding Rs.2 lakh. In such cases, besides the sale price, the seller is required to collect an additional 1% from the purchaser, and pay it to the government.

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This provision relating to vehicles applies not only to businesses that sell goods or provide services, but to all types of sellers. Even a salaried employee who sells a car for more than Rs.10 lakh, would need to collect TCS. Even a vehicle manufacturer selling vehicles to dealers, and a dealer selling those vehicles to customers, would need to collect TCS.

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It would also apply to sale to all buyers, with certain exceptions. In case of sale of vehicles, government departments, public sector undertakings, clubs, and some others are excluded, and do not have to pay TCS. There is also an exclusion for a retail buyer purchasing goods for personal consumption. It may be possible to claim that a retail buyer of a car, buying the car for his personal use, does not have to pay the TCS. However, for the purchase of goods or services exceeding Rs.2 lakh in cash, these exclusions would not apply.

The use of the term “motor vehicle” would include all types of vehicles—two-wheelers (such as high-end motorcycles), motor cars, SUVs, trucks and buses. Second hand sales would also be subject to TCS, if the sale value exceeds Rs.10 lakh.

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