Income-tax (TCS) on Purchase of Motor Vehicles of value of More than Rs. 2.00 Lakhs  

Sumerpur | Pali | Rajasthan :  After passing and acceptance the Finance Bill, 2016, now Income-tax (TCS) @ 1% on Purchase of each Motor Vehicles having sales value above Rs. 2.00 Lakhs including Trucks and Two Wheelers will required to collected. It is very harsh provision and unnecessary except in case of luxury Motor Cars and Motor Cycles.

Relevant provisions of new sections 206C(1E) and 206C(1F) have become operative since 01.06.2016. After this finance Act, 2016, a circular No. 22/2016 was also issued by CBDT (Central Board Of Direct Taxes) on 08.06.2016 widening the TCS base on Motor Vehicles and provisions of  sec. 206C(1E) has also made applicable to Motor Vehicles also.

As per cumulative effect of both the sections and the circular, TCS will be required to make in following circumstances :-

1. If sales consideration of any vehicle exceeds Rs. 10.00 Lakhs, TCS (Income-tax) will be required to collect @ 1% on complete sales consideration irrespective of mode of payment ( Whether Cheque or Cash) .

2. If sales consideration of any vehicle exceeds Rs. 2.00 Lakhs (and does not exceed Rs. 10.00 Lakhs), TCS will be required @ 1% on Cash Payment exceeding Rs. 2.00 Lakhs in whole transaction. Suppose, in a transaction of Rs. 5.00 Lakhs, 2.00 Laks are paid by cheque and Rs. 3.00 Lakhs are paid by cash, TCS will be collected @ 1% on Rs. 3.00 Lakhs. But if, 3.50 Laks are paid by cheque and Rs. 1.50 Lakhs are paid by cash, TCS will not be collected @ 1% on Rs. 1.50 Lakhs since it is less than 2.00 Lakhs.

Important thing is that it is applicable to each class of vehicle including Trucks, light commercial vehicles, Four Wheelers, Three wheelers and  Two wheelers etc. whether purchased for commercial use or private / personal use.  By this TCS whether tax base will be increased or not but harassment will definitely increased. These provisions will be applicable on sales of second Hand vehicles also. These provisions will not applicable to individuals if there total turnoverin a financial year is less than Rs. 1.00 Crore. However, these provisions  will definitely control black money by identifying such cash buyers.