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TCS @1% on sale of motor vehicles

(Guest)

If a dealer sells a motor vehicle whose worth is Rs.9.5 lakhs and after adding some accessories cost i.e. Insurance etc worth became Rs.10.5 lakhs and the buyer give Rs.1.5 lakhs by cash and rest by cheque. What is the treatment of TCS @ 1% as per todays circular 22/2016 ?

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4 Replies

Taxhelp.com (Professional) (94 Points)
Replied 08 June 2016

Hi Abhishek

The provisons of TCS on sale of motor vehicles exceeding ten lakh rupees is not dependent on mode of payment. Any sale of motor vehicle exceeding ten lakh would attract TCS @ 1%.

TCS will be applicable only on value of motor vehicle and other cost will not be included.

Thanks

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(Guest)

Thanks But as per the circular 22/2016's faq . No. 7 example of Rs. 8 lakhs , there is a provision of cash payment greater than Rs.2 lakh in which 1% TCS also applicable. Other than provision of tcs on excess payment than Rs.10 lakhs.

Vikas Shenoy (vks.shenoy@gmail.com) (192 Points)
Replied 15 July 2016

When a motor vehicle is sold for an amount above Rs 10 Lakhs, TCS @ 1% is applicable irrespective of the mode of payment.

When the motor vehicle is sold for an amount between Rs. Two Lakhs and Rs. 10 Lakhs, TCS @ 1% will be applicable only where any part of the payment is made in cash.

Vishal Goel (Chartered Accountant) (1688 Points)
Replied 15 July 2016

CBDT vide Circular No. 22/2016 [F.No 370142/17/2016-TPL] dated June 08, 2016 clarified on issued arise from levy of TCS @ 1% on Sale of Motor Vehicle of Value Exceeding Rs.10 Lacs.

As per section 206C(1 D) , tax is to be collected at source at the rate of 1% if sale consideration received in cash exceeds 2 lakh rupees whereas as per section 206C(1F) tax is to be collected at source at the rate of 1% of the sale consideration of a motor vehicle exceeding 10 lakh rupees . Whether TCS will be made under both sub-section(ID) and (IF) of the section 206C @ 2% where part of the payment for purchase of motor vehicle exceeds 2 lakh rupees in cash?

Answer: Sub-section (IF) of the section 206C of the Act provides for TCS at the rate of I% on sale of motor vehicle of value exceeding 10 lakh rupees. This is irrespective of the mode of payment. Thus if the value of motor vehicle is 20 lakh rupees, out of which 5 lakh rupees has been paid in cash and balance amount by way of cheque , the tax shall be collected at source at the rate of 1% on total sale consideration of 20 lakh rupees only under sub-section (IF) of section 206C of the Act. However, if a vehicle is sold for 8 lakh rupees and the consideration is paid in cash, tax shall be collected at source at the rate of 1% on 8 lakh rupees as per sub-section(I D) of section 206C of the Act.

In your case you are not applying cash more than 2 lakh dats y section 206(1D) wont apply...