DEDUCTABILITY OF TCS

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.

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

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.

TCS can't be deducted but it will be collected additionally in addition to the sale value

TCS will not be collected in case of sale from dealer to dealer