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Old 28th May 2016, 11:20   #46
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Default Re: 1% TCS on vehicles above Rs. 10 lakh from June 1, 2016

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Originally Posted by GTO View Post
It will be. How else will you deposit the TCS? It can be done only with the PAN.
What I meant was why specify a floor of 10 Lacs? Make it mandatory for all car purchases. Will tackle problem of cash payment in case of second hand cars to a great extent. We have Rs. 50 Lacs floor on Real Estate purchases and people are structuring cash and cheque component to avoid getting into tax net and 1% TDS.

Also,instead of TCS, Government should follow the Real Estate mechanism and make it TDS. Buyer has to deduct it and deposit it with the Government against Dealer's PAN so both buyer and seller will be covered. And dealer can adjust it in the advance tax payments which happen every quarter rather than buyer who (if individual) will have to wait for year end.
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Old 28th May 2016, 19:59   #47
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Default Re: 1% TCS on vehicles above Rs. 10 lakh from June 1, 2016

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Originally Posted by nik hill View Post
The idea behind the move is to bring those people in tax net who never pay taxes or file returns by tracking high value sales like million rupee car.
After sub 4 meter category of cars, now there will be another new category of sub 10 lakh value cars.
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Old 29th May 2016, 01:30   #48
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Default Re: 1% TCS on vehicles above Rs. 10 lakh from June 1, 2016

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Originally Posted by Nav-i-gator View Post
How's that possible? This can be done in real estate transactions maybe, but in case of car purchase? you can't buy a 25 lakh car, pay 16 lacs in cash, and documents show 9 lacs ex showroom
This is where dealers like BBT come in. In fact this has been going on for quite some time and it will now expand.

All that people who want to not expose themselves to the IT authorities will do is buy a second hand car. A car which is one week or one month old with 100 kilometers or less on the odo. There will be middlemen like BBT etc who will make this a well greased operation.

Now I imagine it will not hold up to scrutiny on how can you buy a one month old 50 lakh car for 9.99 lakhs but there is no mechanism to trace that. Every city has these dealers who have tons of late model used luxury cars - which are a front for this.

This will change nothing.
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Old 29th May 2016, 09:11   #49
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Default Re: 1% TCS on vehicles above Rs. 10 lakh from June 1, 2016

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Originally Posted by Asifgrkhan View Post
This is where dealers like BBT come in. In fact this has been going on for quite some time and it will now expand.

All that people who want to not expose themselves to the IT authorities will do is buy a second hand car. A car which is one week or one month old with 100 kilometers or less on the odo. There will be middlemen like BBT etc who will make this a well greased operation.

Now I imagine it will not hold up to scrutiny on how can you buy a one month old 50 lakh car for 9.99 lakhs but there is no mechanism to trace that. Every city has these dealers who have tons of late model used luxury cars - which are a front for this.

This will change nothing.
Interesting thought, but not possible. Why will a dealer like say BBT take a loss of revenue (white revenue) by claiming a 50 lac car is 9.99 lac? What will he do with his balance sheets? When he buys his 50 lac car from an owner will he pay say 8.00 lac white and remaining say 20 lac cash? What if the owner is a salaried employee who refuses to take black? If he buys the car is say 30 lac white, how can he explain his business model to the tax authorities? buying 30 lac and selling 9.99 lac? If he is incurring such losses, how can he maintain a glitzy showroom? All this crookery was possible in the previous lame duck regime when bribes were openly given and taken, but now it seems very difficult to do.
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Old 30th May 2016, 10:28   #50
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Default Re: 1% TCS on vehicles above Rs. 10 lakh from June 1, 2016

I must admit, I haven't really understood this concept. I had to submit my PAN card, when I purchased a XUV500 recently. And this was inpite of me not taking any loan. Therefore what is the need for deducting this 1%. You have my pan card copy, run it through the database to see if its real or fake, and what kind of returns are filed against it.

Now imagine if I had purchased the XUV in June. The dealer would deduct this 1% tax, but what if my employer does not allow me to declare this as tax already paid. This means that I have to claim for a refund in August next year, when I file my personal returns, which means that the government gets access to interest free funds?
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Old 30th May 2016, 11:27   #51
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Default Re: 1% TCS on vehicles above Rs. 10 lakh from June 1, 2016

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Originally Posted by ajayclicks View Post
I must admit, I haven't really understood this concept. I had to submit my PAN card, when I purchased a XUV500 recently. And this was inpite of me not taking any loan. Therefore what is the need for deducting this 1%. You have my pan card copy, run it through the database to see if its real or fake, and what kind of returns are filed against it.

Now imagine if I had purchased the XUV in June. The dealer would deduct this 1% tax, but what if my employer does not allow me to declare this as tax already paid. This means that I have to claim for a refund in August next year, when I file my personal returns, which means that the government gets access to interest free funds?
I am confused. Can you claim income tax rebate as a employee for buying a car? I understand it can be shown as business expense, but only businessmen and consultants can use it, not salaried employees. Secondly regarding refund of income tax, they always give you an interest on it, which is higher than bank interest. So government doesn't get interest free funds.
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Old 30th May 2016, 11:36   #52
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Default Re: 1% TCS on vehicles above Rs. 10 lakh from June 1, 2016

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Originally Posted by apachelongbow View Post
I am confused. Can you claim income tax rebate as a employee for buying a car? I understand it can be shown as business expense, but only businessmen and consultants can use it, not salaried employees. Secondly regarding refund of income tax, they always give you an interest on it, which is higher than bank interest. So government doesn't get interest free funds.
No we do not get rebates as employees. What I understand is, this 1% tax can be adjusted against the total income tax that I pay. Now, many employers ask employees to declare their investments etc., and they deduct tax from monthly salary accordingly. If an employer does not rejig the system to allow for this 1% declaration, then the employee has no option but to claim when he/she files the personal returns.

I wasn't aware of the IT department refunding with interest. I thought that was applicable only incase of a delay in issuing refunds. In my illustration, I am paying this 1% tax in June 2016, and getting the refund after August 2017.
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Old 31st May 2016, 09:55   #53
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Default Re: 1% TCS on vehicles above Rs. 10 lakh from June 1, 2016

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Originally Posted by Sommos View Post
The rule does not specify anywhere that TCS is to be collected only by the dealers. The rule is . The interpretation, at this time is, that this will be applicable for second hand car sale also.

But this will make the things complicated because you cannot collect/ deposit TCS without a TAN.
The seller can deposit tax in same way it is done during the real estate re-sale transaction (Form 22B or so.) This doesnt need TAN for the seller.

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Originally Posted by srishiva View Post
A farmer who earns 50 lakhs doesnt have to file income tax. Now he has to do it to reclaim the 1% he paid
Other than IT department getting to know more people, what purpose is this really serving?

Make PAN card compulsory and have that used for everything (they do it currently only for high value transactions). For all this to work, the sellers have to be accounted properly. They need to track from wholesale to retail and to customers and make sure every step is legally recorded and accounted for.
As far as I knew, PAN card details are mandatory for any vehicle & real estate purchase all over India; isn't that the case?

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Originally Posted by TSIched'Out View Post
What I meant was why specify a floor of 10 Lacs? Make it mandatory for all car purchases. Will tackle problem of cash payment in case of second hand cars to a great extent. We have Rs. 50 Lacs floor on Real Estate purchases and people are structuring cash and cheque component to avoid getting into tax net and 1% TDS.

Also,instead of TCS, Government should follow the Real Estate mechanism and make it TDS. Buyer has to deduct it and deposit it with the Government against Dealer's PAN so both buyer and seller will be covered. And dealer can adjust it in the advance tax payments which happen every quarter rather than buyer who (if individual) will have to wait for year end.
The idea is to catch the end-users who are able to afford a car worth more than 10lacs without paying rightful taxes; Dealers are already in the tax net (hope so) and GoI doesnt need info about them. Info is needed about the ones who pay for luxury but evade taxes. GoI would certainly need to pay interest (from the date it was collected) in case it ends-up refunding the tax collected.
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Old 31st May 2016, 12:47   #54
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Default Re: 1% TCS on vehicles above Rs. 10 lakh from June 1, 2016

This database could've been gathered even from the registering authorities aka RTOs. Approach the person in whose name the vehicle is registered. As simple as that.

This provision of 1% Tax Collected at Source, as already decided by many, is only a means of garnering revenue. A person who does not file his/her returns, won't care about getting refund of that percent of tax.

I'm not sure if PAN is mandatory for buying cars (I bought a two wheeler few days back, and did not require my PAN card). But if it is not mandatory, it should be made mandatory. If the purpose is to nitpick the income tax evaders, the VAT returns and the RTOs are the two agencies that need to work hand in hand. The procedure for filing of VAT returns of car seller dealers should be amended, in so far as, the PAN of the buyer must be asked in the Annexure supplementing the Return. GST onwards, the dealers have to submit bill wise details of their sales in the annexures, along with TIN of their customers. An addition of PAN can be made in the annexures. The RTO should forward a copy of list of vehicles registered in say, a month along with details of the buyers. That should serve the purpose of the Income Tax Department well.

But then again, I'm confident that this won't happen. Just like tax defaulters, wiser counsel with the law makers, is missing.

Last edited by Swapnil4585 : 31st May 2016 at 13:15. Reason: Adding text.
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Old 31st May 2016, 13:07   #55
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Default Re: 1% TCS on vehicles above Rs. 10 lakh from June 1, 2016

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Originally Posted by Swapnil4585 View Post
I'm not sure if PAN is mandatory for buying cars (I bought a two wheeler few days back, and did not require my PAN card). But if it is not mandatory, it should be made mandatory.
PAN is indeed mandatory. I had to submit a copy of my PAN card when i bought my CL500 last year and the S Cross last month.
I believe PAN has to be declared for any transaction above 50K.
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Old 1st June 2016, 20:42   #56
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Default Re: 1% TCS on vehicles above Rs. 10 lakh from June 1, 2016

The Finance Ministry has exempted automobile dealers from paying this 1% TCS to auto manufacturers. This was communicated verbally by a CBDT spokesperson to the Society of Indian Automobile Manufacturers (SIAM) earlier today.

A written clarification on this regard will be issued soon.

The rule of collecting 1% TCS from customers who purchase cars over Rs 10 lakh stands imposed from today.

Quote:
"We have recently got verbal clarity from Central Board for Direct Taxes (CBDT) that manufacturers don't need to collect TCS from dealerships. They will also soon come up with written clarification," Vishnu Mathur, Director General, SIAM told ETAuto.

Dealers were upset as the decision would have caused a massive increase in working capital.

According to SIAM, however, the individuals who buy cars above Rs 10 lakh will have to dole out one percent TCS to the dealers which shall be adjusted in his total income tax payment.

Mathur also clarified that even if an individual sells a car for over Rs 10 lakh will not have to collect any TCS, however, if a commercial player such as True Value or First Choice sells a vehicle priced above Rs 10 lakh he will have to collect one percent TCS.
ET

Last edited by RavenAvi : 1st June 2016 at 20:43.
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Old 9th June 2016, 09:28   #57
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Default Re: 1% TCS on vehicles above Rs. 10 lakh from June 1, 2016

The Central Board of Direct Taxes (CBDT) has clarified through a set of Frequently Asked Questions (FAQs) that government departments, distributors and dealers are exempted from the 1% TCS levied on sales of motor vehicles over Rs 10 lakhs.

The CBDT said that the 1% TCS will only be applicable to retail sales and has to be collected by the seller from the buyer.

Quote:
"This (TCS) is brought to cover all transactions of retail sales and accordingly, it will not apply on sale of motor vehicles by manufacturers to dealers or distributors," the FAQ said.

The FAQ further clarified that the levy would apply to all such motor vehicles, regardless of whether these are luxury cars or not.

However, it said the levy will not apply to purchase of such vehicles by government departments, institutions notified under the UN privileges Act and High Commissions and Embassies.

Giving an example, it said the levy would apply to part-payment made at the time of booking and also at the time of final payment.

It also said TCS applicability will be based on each sale of motor vehicle and not on aggregate value of sale made during the year.

With regard to the levy of TCS on vehicles purchased in cash, CBDT clarified that 1 per cent TCS will be applicable for any cash transaction above Rs 2 lakh.
ET
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Old 9th June 2016, 09:52   #58
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Default Re: 1% TCS on vehicles above Rs. 10 lakh from June 1, 2016

To claim back this 1% TCS, refund is the only way after a year or we/employer can adjust it against the tax we pay for the salary? For eg, if i've to pay tax of 1L for my income and 1% TCS is 12K, can i just pay 88K as my tax and submit TDS certificate to the employer?
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Old 7th July 2016, 21:08   #59
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Default Re: 1% TCS on vehicles above Rs. 10 lakh from June 1, 2016

I bought a car in Jun whose ex showroom price was below 10 lacs, and on road above 10 lacs. When booking the car i was told that 1% TCS will be applicable.
However i have not got any voucher or separate TCS receipt from the dealer.

Has the TCS been applied or is it yet to be implemented?
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Old 7th August 2016, 13:55   #60
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Default Re: 1% TCS on vehicles above Rs. 10 lakh from June 1, 2016

I have few doubts too.

1) What if an NRI decides to buy a 15 Lakh car in India, does he have to pay the 1% TCS, given that he never files for IT.

2) Also is the 1% TCS applicable on the Ex-showroom price or the OTR price, as in the above case the Ex-showroom can be below 10 Lakhs for a car and the same car can be above 10 Lakhs in OTR price due to high state taxes.

3) Do we get a receipt for the TCS collected from the dealer ?

4) If a person sells his used car worth 15 Lakhs, does he collect 1% TCS from the buyer and what is the guarantee that he ( Seller ) will deposit this money to GoI ?

5) Will GoI refund our 1% TCS tax with interest due to the number of months the money is with them rather than in our bank account ?

Last edited by stanjohn123 : 7th August 2016 at 13:57. Reason: Additional question
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