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DEDUCTABILITY OF TCS

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RAMANDEEP SINGH

M.Com

25 Points Posted on 24 May 2022

Whether TCS is deductable on sale of vehicle from Dealer to Dealer ?

Replies (5)

Quick Summary

This discussion explores whether Tax Collected at Source (TCS) is deductible on the sale of vehicles between dealers. Based on CBDT Circular No. 22/2016 and its FAQs, TCS on motor vehicle sales is intended for retail transactions. Therefore, sales from manufacturers to dealers are excluded, and it's argued that sales between dealers should also fall outside TCS ambit. The reasoning is that dealers are already registered taxpayers, and TCS aims to track high-value transactions, not to be levied on inter-dealer sales.

Kev Men

790 Points Posted on 24 May 2022

The CBDT had issued a Circular no. 22/2016 relating to the TCS u/s 206C. As per FAQ of the circular, in Q No.1, it is said that the TCS on the sale of motor vehicle is brought to cover all transactions of 'RETAIL SALES' and accordingly won't apply on sale of motor vehicles by manufacturers to dealers/distributors.

In my humble opinion, the transaction of sale of vehicle from dealer to dealer will not be within the ambit of TCS. This is also with a view that ' the purchasing dealer' will already be registered under Income Tax Act and the basic intention of introducing the TCS on sale of motor vehicle is to track/notify the high value transaction.

Eswar Reddy S

CFO- at NHTF

58280 Points Posted on 24 May 2022

The seller shall collect the tax @ 1% from the purchaser on sale of any motor vehicle (and not from purchaser of Luxury Cars only) of the value exceeding Rs. 10,00,000. Section 206C(1F) is applicable to each sale and not to aggregate value of sale made during the year.

There is no exemption to dealer

debora M

BUSINESS DEVELOPMENT MANAGER

1697 Points Posted on 24 May 2022

TCS is the tax which is collected by sellers while selling something to buyers. TDS deduction is applicable on payments such as salaries, rent, professional fee, brokerage, commission, etc. TCS deduction is applicable on sales of goods like timber, scrap, mineral wood, and so on.