[GTO]

Link to full Economic Times article

From the next financial year, such deals will start coming under income tax scrutiny -- expensive paintings, antique jewellery, vintage cars, real estate or any other art bought by companies will now face income tax scrutiny and tax will be demanded if real price or fair value has not been paid on that.

In this year’s budget, the government has changed this provision and now even art bought through companies can be taxed. Industry trackers said the tax department can scrutinise and tax art bought at a lower price. The amendment in the recent budget has dealt with this loophole, they said.

The tax department is looking to rope in art valuers who could work out the market price of expensive art collections. To challenge the value of any art, the department will need an alternative view from a credible source.

In another case, a businessman had contacted his tax advisor on whether his vintage cars could attract the attention of the tax department. Many such people with expensive hobbies are now worried that tax officials could be at their door to ascertain the current value of old purchases. This might just happen in the coming year or so, industry trackers said.

[lamborghini]

How are they going to be able to determine the fair price though? Would these 'experts' be qualified enough?
In Mumbai they may base some purchases such as real estate on the ready reckoner rates - but even then, neighbouring properties often see a 50% variation in pricing!

[manishkapadia]

While this is a very good measure and I am all for Tax compliance, how exactly does Tax department ascertain the value of Antiques and Vintage cars in case of a scrutiny or a dispute. There is no Ready Reckoner rate to refer to unlike property transactions.

[amitc7]

Another way to harass the harried public. They do not have the numbers to provide a proper normal income tax collection team, how will they figure this out.

Without removing income tax, they have imposed transactional tax, utter insanity.

[anjan_c2007]

The cases of over or under valuation will be under the radar of the IT department as it appears overtly. The recent cases of sales and purchases (assessment year 2017-18 and onwards) need to stand scrutiny.

The assessors/ valuers for the works of art, paintings and vintage cars may be appointed by the IT department from among those they consider experts in this field. So maybe one finds some car brokers too, who could sneak in. Anything can happen these days.

If the assessee is dissatisfied with the valuation by such assessor, the grievance can be heard by the respective Appellate Authority, who usually is the respective Commissioner of Income Tax (COIT) who has quasi- judicial powers . In case, such a decision by the COIT is disputed by the assessee, an appeal lies with the respective High Court.

It however surprises me that the only mention about vintage cars in the Secs 1 - 217 long Motor Vehicles Act, 1988, is just a fleeting mention in the Section 59 and nowhere else. And this section covers the "Power to fix age of motor vehicle" by the central government.

Other than the MV Act, 1988, the Director General of Foreign Trade (DGFT), Ministry of Commerce's circulars deal with restriction on exports of vintages, manufactured upto certain years and not later - cars , parts thereof and components manufactured prior to 1.1.1950 and bikes, parts thereof and components made prior to 1.1.1940. The export of these are restricted but permitted under licence. Cars manufactured prior to 1.1.1950 are allowed to be imported since April 2013.

Vintages have been altogether avoided or ignored/ neglected by our central government as far as legislations are concerned. And now they wake up one fine day to discover these new Holstein cows, to be able to recover some money through the IT department.

[Stanher]

But isn't the government (ironically!) yet to ascertain what car/vehicles come under the 'vintage' category? So how can they decide on assessment for tax as yet?

[anjan_c2007]

Originally Posted by Stanher

But isn't the government (ironically!) yet to ascertain what car/vehicles come under the 'vintage' category? So how can they decide on assessment for tax as yet?

Yes Stanher, they have not classified cars as vintage as such. I have a few RTI replies to conclude this fact from the Ministry of Road Transport and Highways, Ministry of Commerce and Ministry of Heavy Industry.

[Bulldogji]

Old cars getting I T attention also has a lot to do with many who keep posting prices on social media.

I have often wondered why some like to discuss prices and values, especially of cars belonging to others

I request all to desist from discussing prices and values on public forums.

If not, all will ultimately suffer. Remember, the valuer appointed by the government will be clubs like VCCCI, HMCI , KVCC etc.

Pictures, prices, ownership etc should stop being talked about .

[alpha1]

Originally Posted by Bulldogji

Old cars getting I T attention also has a lot to do with many who keep posting prices on social media.

I have often wondered why some like to discuss prices and values, especially of cars belonging to others

I request all to desist from discussing prices and values on public forums.

If not, all will ultimately suffer. Remember, the valuer appointed by the government will be clubs like VCCCI, HMCI , KVCC etc.

Pictures, prices, ownership etc should stop being talked about .

On the other hand, discussion of prices openly leads to a more transparent price discovery mechanism. The more secrecy there is, the more arbitrary the pricing becomes (usually dictated by the seller or the agent).

In fact more publicly transparent the pricing becomes, the more you can fight with arbitrary govt authorities, who are no different than arbitrary private authorities running the show in secrecy.

[KartikeyaL]

IMHO, the matter is very complicated, many cars are sold for cash only deals, because the owners do not have valid papers or due to the involvement of the brokers the cash component is kept high.

There might be people who have bought cars and have all documents in order, they need not worry, the problem will arise when cars are without documents or documents are there but the purchase has never been accounted for.

At the end of day, every vehicle should be accounted for in the books of accounts, all invoices for purchases of vehicle/parts and services should be kept in the records.

As far as the value is concerned, once you have accounted for the initial purchase then eventually there would not be any problem even if the prices increase during the course of the ownership.

Also note that the article says that the department is going to scrutinize deals ( I assume and hope new deals)

Large deals in cash in any field now, will cause problems in the future.

[GTO]

Originally Posted by Bulldogji

I request all to desist from discussing prices and values on public forums.

Pictures, prices, ownership etc should stop being talked about .

Whatever the sector, transparency has unfailingly brought long term benefits with it. I think we should stop worrying about restricting information in today's internet age. About time we realise this is now an 'open' world we live in.

The internet is the greatest leveller of all time.

With reference to vintage cars, it's taken the segment from a small restricted club to one whose membership is now open to newbies. There are so many first-time classic car buyers around.

[Bulldogji]

Originally Posted by GTO

Whatever the sector, transparency has unfailingly brought long term benefits with it. I think we should stop worrying about restricting information in today's internet age. About time we realise this is now an 'open' world we live in.

The internet is the greatest leveller of all time.

With reference to vintage cars, it's taken the segment from a small restricted club to one whose membership is now open to newbies. There are so many first-time classic car buyers around.

With due respect, information can never be restricted.

It is speculation, guesses and discussions on values of cars belonging to others, by those with imperfect knowledge, sometimes with dubious intent, which should be restricted.

In fact, on this very forum, price discussions were earlier not allowed

[GTO]

Originally Posted by Bulldogji

With due respect, information can never be restricted.

Glad you agree!

It is speculation, guesses and discussions on values of cars belonging to others

The more the transparency, the less the speculation.

In fact, on this very forum, price discussions were earlier not allowed

The forum has had no such rule. If there was an informal one, I would strongly discourage it.