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Old 8th August 2021, 07:47   #1
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Default Not filed your IT returns? 5% TCS on new car!

My brother in law in Hyderabad got this price list for Compass.

Can someone tell me what is this 5% TCS which is apart from 1% that I know of.(.75%) now. If you see at the bottom, it talks about specified category.

Don't think that 5% is valid. Am I missing something here?
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Old 9th August 2021, 19:21   #2
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Default Re: TCS on sale of vehicles above Rs. 10 lakhs reduced to 0.75% till Mar'21

Quote:
Originally Posted by raaj.bhalla View Post
My brother in law in Hyderabad got this price list for Compass.

Can someone tell me what is this 5% TCS which is apart from 1% that I know of.(.75%) now. If you see at the bottom, it talks about specified category.

Don't think that 5% is valid. Am I missing something here?
Your answer is here :
https://taxguru.in/income-tax/specif...ab-206cca.html

and

here

Quote:
The Central Board of Direct Taxes (CBDT) has issued a new functionality which will help deductors or collectors identify "specified persons" on whom the higher tax deducted at source or tax collected at source rate of 5% would apply, in turn reducing compliance burden.

Deductors or collectors can use the functionality – Compliance Check for Sections 206AB &206CCA available on the reporting portal of the income-tax department – by keying in permanent account numbers (PAN) in bulk or singularly. The functionality will respond in the affirmative or negative.

The government had introduced two new sections in the income tax Act - 206AB and 206CCA – which mandate tax deduction or tax collection at higher rate in case of certain non-filers or specified persons. This will take effect from July 1, 2021.

Specified person would mean those that have not filed income tax returns for FY19 and FY20, and aggregate of TDS or TCS is Rs 50,000 or more in each of these years. It does not include a non-resident who does not have a permanent establishment in India.

For instance, if a company pays a contractor and it is liable to deduct 2% TDS on the payment to the contractor, it has to check whether the contractor has filed its last two returns or not. If the contractor has not filed last two returns ITRs and the total TDS deducted from A is more than Rs.50,000 then the company has to deduct 5% TDS instead.

“To implement these two provisions, tax deductor/collector was required to do a due diligence of satisfying himself if the deductee/collectee is a specified person. This would have resulted in extra compliance burden on such tax deductor/collector,” the Board said.

The functionality will ensure that deductors or collectors check the PAN in the functionality at the beginning of the financial year without there being any need to check the PAN of the non-specified person again during that financial year.

Experts said that the move would help companies comply with ease, and also leave room for non-compliant specified persons to comply during the year.

“As per the logic of the functionality, list of non-specified persons would get frozen at the beginning of the financial year. The specified persons could, however, enter the coveted club of the non-specified persons during the course of the FY,” said Sandeep Jhunjhuwala, partner at Nangia Andersen LLP.

In a separate circular issued Monday, the Board added that if a specified person files a valid return for the assessment year 2019-20 or 2020-21 during FY 2021-22, that name would be removed from the list of specified persons on the date of filing the return.

Removal of names from the specified person list would be done in case revised or belated filing of the TDS or TCS returns. If aggregate of TDS and TCS is less than Rs 50,000 in any of the financial years of the returns filed, then the name will be removed from the specified persons list.
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Old 21st September 2021, 13:32   #3
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Default Re: TCS on sale of vehicles above Rs. 10 lakhs reduced to 0.75% till Mar'21

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Originally Posted by raaj.bhalla View Post
Can someone tell me what is this 5% TCS which is apart from 1% that I know of.(.75%) now.
BMW pricing in Bangalore with the updated 5% TCS slab, for people who haven't filed IT returns in the previous two years.

Not filed your IT returns? 5% TCS on new car!-screenshot_20210921133225_adobe-acrobat.jpg
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Old 21st September 2021, 14:55   #4
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Default Re: TCS on sale of vehicles above Rs. 10 lakhs reduced to 0.75% till Mar'21

They should increase the TDS on those who haven't filed returns to 30% or more. There is no reason folks should be allowed to buy new luxury cars or any cars for that matter without filing for IT returns. Let the tax evaders at least be forced to buy used cars.

Last edited by Ragavsr : 21st September 2021 at 14:56.
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Old 21st September 2021, 15:00   #5
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Default Re: TCS on sale of vehicles above Rs. 10 lakhs reduced to 0.75% till Mar'21

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Originally Posted by Ragavsr View Post
They should increase the TDS on those who haven't filed returns to 30% or more. There is no reason folks should be allowed to buy new luxury cars or any cars for that matter without filing for IT returns. Let the tax evaders at least be forced to buy used cars.
Not filing IT returns is not equal to 'not paying taxes'. Just saying.

Cheers,

Jay
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Old 22nd September 2021, 08:05   #6
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Default Re: TCS on sale of vehicles above Rs. 10 lakhs reduced to 0.75% till Mar'21

Thanks for sharing, raaj.bhalla! Moving your post out to a new thread so as to inform others. A new thread means 100X the views & 100X the visibility in search engines, including Google. Will add to homepage later this week .

@ BHPians, if you should spot any good post in an existing thread that deserves its own new thread, please report the post and we'll move it out for greater visibility.

Thank you!


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Originally Posted by JayPrashanth View Post
Not filing IT returns is not equal to 'not paying taxes'. Just saying.
Point accepted, but that's still not an excuse to not file returns. To support this country, and as a responsible citizen, you must file your returns every year. On time.
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Old 22nd September 2021, 08:07   #7
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Default Re: Not filed your IT returns? 5% TCS on new car!

So. My Brother in law was not informed of this and this was directly added in the final cost. When he told the dealer that it is not applicable to him as he has been filing tax return every year, they removed it. Ideally, dealers should inform this to uninformed customers. My brother in law was not aware about the TCS (even the 1%) thing and he could have easily paid 5% had he not checked with me.
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Old 22nd September 2021, 08:52   #8
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Default Re: TCS on sale of vehicles above Rs. 10 lakhs reduced to 0.75% till Mar'21

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Originally Posted by JayPrashanth View Post
Not filing IT returns is not equal to 'not paying taxes'. Just saying.
Noted, but why would someone do it?

If paying taxes but not filing returns then it is silly mistake.
If not paying taxes and not filing returns then its is a crime.

In both the cases buyer deserves the penalty of 5% TCS.

If one comes under below 5 lakh income, who are not required to file returns, then they can hardly be in position to buy a new car.

Can you capture other scenarios?
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Old 22nd September 2021, 09:35   #9
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Default Re: Not filed your IT returns? 5% TCS on new car!

It's a brilliant move. Next, there should be differential tax for other big ticket transactions like property registration rates etc. Something that honest tax payers should feel good about

My dad who was on the look out for anew car was informed by both Renault and Kia dealers when we had gone for test drives. AFAIK, this rule came into effect sometime in July. It was discussed briefly in the new car price track thread too.
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Old 22nd September 2021, 10:09   #10
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Default Re: Not filed your IT returns? 5% TCS on new car!

Its a great move. I would be happy if they increase it even further. I cant think if any instance where someone with taxable income below 5 lacs can afford a car above 10 lacs.

But how are the dealers enforcing it? Do we need to submit the ITR as well at the time of booking/delivery? Or just take the word of the customer?
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Old 22nd September 2021, 10:57   #11
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Default Re: Not filed your IT returns? 5% TCS on new car!

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Originally Posted by GTO View Post
Point accepted, but that's still not an excuse to not file returns. To support this country, and as a responsible citizen, you must file your returns every year. On time.
Agree .

Quote:
Originally Posted by raaj.bhalla View Post
So. My Brother in law was not informed of this and this was directly added in the final cost.
A simple 10 second look at the proforma invoice would have shown a huge sum as TCS. In fact, the 4% increase will make the dealership lose potential buyers. Generally, the compliance norm are "guilty unless proven innocent", hence their system probably generated the 'worst' case initially.

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Originally Posted by fordday View Post
Noted, but why would someone do it?
I'm also mystified why someone would do this. These days, any high value or notified transactions done quoting a PAN is anyway sucked up into the OLTASS system, which will automatically generated intimations to 'potential' assessees.

Last edited by itwasntme : 22nd September 2021 at 10:59.
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Old 22nd September 2021, 15:01   #12
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Default Re: Not filed your IT returns? 5% TCS on new car!

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Originally Posted by m8002? View Post
Its a great move. I would be happy if they increase it even further.
5% TCS is going to be fine for salaried individuals who are buying a personal vehicles. What we are forgetting is the fact that many transporters will now have to bear this additional 5% amount even if they have IT return, as they might pay aggregate TCS / TDS over Rs.50,000.

Quote:
Specified person would mean those that have not filed income tax returns for FY19 and FY20, and aggregate of TDS or TCS is Rs 50,000 or more in each of these years. It does not include a non-resident who does not have a permanent establishment in India.
- from post #2.

Now, those whose vehicles have been enrolled in fleet or are also dealing with e-commerce companies, anyways pay TDS @1% under section 194(O) which is not under expedition for this.

So, this 5% is a big amount that gets locked up for upto a year with no interest.
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Old 22nd September 2021, 15:37   #13
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Default Re: TCS on sale of vehicles above Rs. 10 lakhs reduced to 0.75% till Mar'21

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Originally Posted by fordday View Post

If one comes under below 5 lakh income, who are not required to file returns, then they can hardly be in position to buy a new car.

Can you capture other scenarios?
A fresh out of college graduate making, say, 4.8L per annum. Living with parents, so no expenses, the entirety is saved. Two years later, he can easily spend 8L on a car through legitimate, legal savings. Three years later, 12L.
That's not very improbable and happens often. I know many people who saved as much as they can (and could because they didn't have to spend anything as they lived with their parents), and splurged on a car they wanted.

It may not be financially prudent to buy a car at that stage - but that's besides the point; are we going to punish financially imprudent spends now?

Last edited by N.A.GTC : 22nd September 2021 at 15:40.
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Old 22nd September 2021, 15:42   #14
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Default Re: Not filed your IT returns? 5% TCS on new car!

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Originally Posted by blackwasp View Post
5% TCS is going to be fine for salaried individuals who are buying a personal vehicles. What we are forgetting is the fact that many transporters will now have to bear this additional 5% amount even if they have IT return, as they might pay aggregate TCS / TDS over Rs.50,000.

- from post #2.

Now, those whose vehicles have been enrolled in fleet or are also dealing with e-commerce companies, anyways pay TDS @1% under section 194(O) which is not under expedition for this.

So, this 5% is a big amount that gets locked up for upto a year with no interest.
Wouldnt most of the fleet vehicles be below the 10 lacs threshold unless its an Innova. Also, these would be registered under the company name which means the company should be ITR compliant.

I agree there would be an odd instance of some company which is not doing well and has to park the money in tax, but overall its a good move especially for the luxury car sales.
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Old 22nd September 2021, 16:07   #15
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Default Re: Not filed your IT returns? 5% TCS on new car!

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Originally Posted by m8002? View Post
Wouldnt most of the fleet vehicles be below the 10 lacs threshold unless its an Innova. Also, these would be registered under the company name which means the company should be ITR compliant.

I agree there would be an odd instance of some company which is not doing well and has to park the money in tax, but overall its a good move especially for the luxury car sales.
This TCS is applicable to not just new cars but all motor vehicles. So even trucks will come under this purview.
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