[Jaggu]

Originally Posted by drmohitg

So then how does this news change anything? Once your PAN number is on record at the time of sale, it rules out any black money transaction right?

Beat's my logic too, either they have not been very strict about this through out the country and now planning to, or some new chap wanted to make a breaking news release

[The Rationalist]

Originally Posted by drmohitg

But wasn't PAN card already a mandatory requirement by the dealer when you buy a car? IIRC we were asked to submit one, all three times that we have bought new cars in the last 5 years.

Originally Posted by Jaggu

Exactly PAN was needed for a long time, they now even have an advance tax component similar to TDS on all purchases about 4 lakhs also? Atleast in BLR i have seen PAN being mandated for quite a while.

Earlier the limit was all purchases above ₹ 5 lakh. Now the limit has been lowered to all purchases above ₹2 lakh. In effect all cars.

[RAPTOR-XUV]

Originally Posted by gto

Only thing I don't agree with is excluding two-wheelers. Why? With so many big bikes around, I'm sure there are a lot of black-moneyed dudes buying them.

Bang on GTO. There is a new Triumph dealership opened near my Office here at Vijayawada and the starting price is around 7.5Lac's OTR. Casually inquired about the bookings and though the manager was hesitant to disclose, on further probing he said that there were close to 25 booking already and most of them are preferring to pay by cash. An apt move by the IT department and they should seriously include the two wheeler segment too.

[Jaggu]

Originally Posted by The Rationalist

Earlier the limit was all purchases above ₹ 5 lakh. Now the limit has been lowered to all purchases above ₹2 lakh. In effect all cars.

Thanks that makes sense and you are correct. I think i got confused with TCS thing (1% advance tax on ex showroom) being collected for all vehicles above 10 lakhs as per new budget.

But i remember giving PAN for the 50k bike purchase for a family member even a year back in Bangalore.

Anyways this is a good move, as long as they are able to bring more and more people to comply with tax rules and transfer that benefit to everyone with lower tax, better infra, and public spending. I am all for it and 100% tax compliant too since i started earning

EDIT: Bikes are covered under TCS if ex showroom is above 10 lakhs, the Tiger price list had that component clearly mentioned.

[djay99]

Originally Posted by drmohitg

So then how does this news change anything? Once your PAN number is on record at the time of sale, it rules out any black money transaction right?

AFAIK dealer is supposed to report to IT department with PAN number and sale value but not sure if every one does that. IT department software scans for a transaction beyond a persons income limit and reports it to an officer who will then check for its authenticity and issue a notice if required.
This software is being improvised to catch more and more such transactions.

There are many loop holes in our system and there is lack of transparency as all dealers care for sale and not whether it is paid by black/white money. Politicians own expensive cars beyond their so called income limit but how many are scrutinized?

I would say bring this rule for used car/bike market as well. When I was selling my Z800, I used to get offers from folks who would offer to pay full cash or 50-50. I was not sure whether this cash is genuine, counterfeit, stolen or whatsoever it is. Some offered bearer cheque to account few lakhs as petty expense for availing tax sops

OT: I remember days when people used to buy Reliance phone with an invalid address proof and would make calls worth thousands or even lakhs. Retailers helped in activating such mobiles. Anything can happen in India

[ajayclicks]

Well, am sure many of these individuals are smart enough to show "agricultural income" and get away with it. To quote from this report:

The misuse of agricultural income has been highlighted before. The Tax Administration Reform Committee, led by Parthasarathi Shome, in its third report in November 2014, had said, "Agricultural income of non-agriculturists is being increasingly used as a conduit to avoid tax and for laundering funds, resulting in leakage to the tune of crores in revenues annually."

http://timesofindia.indiatimes.com/b...w/51377186.cms

[hserus]

Originally Posted by Jaggu

Thanks that makes sense and you are correct. I think i got confused with TCS thing (1% advance tax on ex showroom) being collected for all vehicles above 10 lakhs as per new budget.

But i remember giving PAN for the 50k bike purchase for a family member even a year back in Bangalore.

The usual way is to register the bike in the name of some random fellow - eg: labourer / cobbler etc.

Old trick - for example when the cricketer Azhar's son / nephew were in a superbike crash on the hyderabad airport road several years back, the bike was gray market imported and registered in the name of some random mechanic.

[vinit.merchant]

Originally Posted by Jaggu

Beat's my logic too, either they have not been very strict about this through out the country and now planning to, or some new chap wanted to make a breaking news release

It is possible that the rule is meant for the used car dealers. Because I remember that new car dealers stopped transacting in "all cash" since a long time now.

But it can also be for the new dealers since it wont be a surprise to find a person holding multiple PAN. Considering this angle, the rule will start making sense.

[GTO]

Originally Posted by GranvilleDsouza

I agree to this. NEXA was allowing full payment of cash for the S-Cross as well when asked.
However, that was just an 'asking thing' and did not go ahead with it

Cash isn't evil. On the contrary, cash is good...cash is king .

What's bad is unaccounted cash (aka black money). Even if an authorised dealer takes payment in cash, it won't be hidden under his bed . It'll be reported on his books as 'white money'.

[NPV]

Originally Posted by GTO

Only thing I don't agree with is excluding two-wheelers. Why? With so many big bikes around, I'm sure there are a lot of black-moneyed dudes buying them.

Good point!
At least they should fix a value limit for 2 Wheelers that are exempt, say under Rs.75,000 or 1 Lakh.

Right now, even performance motorbikes are exempted

[avira_tk]

Originally Posted by ajayclicks

Well, am sure many of these individuals are smart enough to show "agricultural income" and get away with it. To quote from this report:

The misuse of agricultural income has been highlighted before. The Tax Administration Reform Committee, led by Parthasarathi Shome, in its third report in November 2014, had said, "Agricultural income of non-agriculturists is being increasingly used as a conduit to avoid tax and for laundering funds, resulting in leakage to the tune of crores in revenues annually."

http://timesofindia.indiatimes.com/b...w/51377186.cms

While agricultural income is tax exempt, agriculture itself is in bad state. Taxes/income will vary based on commodity prices. An interesting thing is that there are urban residents with agricultural income in excess of 1 crore most of them based in Bangalore as far as Karnataka concerned, these people need to be advisers to actual farmers who are deep in debt and unable to sustain themselves, it takes something to live far away and earn on this scale . Agricultural income isn't taxable, but it will shift your tax slab, so its a way to launder money you obviously didn't make from agriculture.

[shatrughna]

Its a good initiative to trace unaccounted money, if any . However, I dont think that its going to change the scenario of cash transactions too much nor I think that this would be the intention of the IT dept. In rural areas even today most of the transactions happen in cash ( receipt/ payments) for small farmers/ traders. And many of us ( my relatives) do save for several years to buy a car or jeep and that money is mostly in cash. For service class people bank loans for purchase of car is not difficult but for small traders/ farmers that is not an option which would be easily available and they have no choice but to save cash and use cash. I have always been able to buy a better (costlier) car than what my farmer friends who may be much richer than me in real income/ wealth- only because of my loan eligibility due to my salary and of course they pay zero tax.
Assuming that a HUF / farmer has agricultural income of say 30 Lakhs per annum and most receipts in cash or converted to cash for several reasons- which rule would deny them an option to buy a car in cash or even a luxury car in cash with savings of few years? But then a lot of so called builders, politicians would show agricultural income in their returns if they want.
Considering various routes available for justifying cash holding/ transaction- I dont think this initiative would yield much result in the beginning nor should it matter. I rather feel that government should make it more convenient to purchase cars or even a property in cash for those who have money till few years more while keeping an eye on such transactions. By purchasing cash / property - individual is paying registration / stamp duty / VAT / service taxes etc. which is a source of taxes while also allowing the flow of money in the economy and also can be a trigger to mandate them to file IT returns. Few years down the line, inter alia, govt. should make it mandatory for a buyer to make payment to manufacturer only and that too through wire transfer/ NEFT only. Dealers may be paid their commission etc by the manufacturer - this would curb several other malpractices by the dealer as well as prevent cash transactions. It will initially be resisted and though slowly but firmly adapted well by car buying public, and then to other segments of automobile sector like tractors, motorcycles etc. Move to housing / commercial sector next. All marginal benefits through such initiatives will hopefully have a sizeable cumulative effect on overall health of economy.

[car_crazy1400]

Originally Posted by GTO

Cash isn't evil. On the contrary, cash is good...cash is king .

What's bad is unaccounted cash (aka black money). Even if an authorised dealer takes payment in cash, it won't be hidden under his bed . It'll be reported on his books as 'white money'.

Agreed! I remember way back in 2001, when Mitsubishi Lancer was at its peak period, i had gone to the dealer for buying a SLX with my friend and was refused any kind discount.

However, my friends brother then took cash (a whopping 10 lacs) from bank at that time and haggled a discount on the on road price for 60 thousand.

So yes, in our country cash is king.

[hserus]

With cash payments there is absolutely no way to have an audit trail. In other words, if the builder issues a sale deed for 60 lakhs and pockets 40 lakh cash for a 1 crore flat, the govt is cheated of revenue from registration, stamp duty etc to the tune of whatever the differential is between a 60 lakh flat and a 1 crore flat.

No way to track the source or destination either - so stolen, counterfeit money enters the pipeline too not just black money.

Extending credit to HUFs, businessmen, farmers etc is an entire topic by itself - but lack of that is not going to be a sufficient excuse to allow a cash economy to continue for high volume transactions.