As announced in the Budget 2016-17. TCS on Motor Vehicles is started collecting from 1st June 2016. Small budget Vehicles ( Valued up to 1000000) are excluded from the ambit. TCS on Motor vehicle is applicable to the Vehicles costing 10 Lakhs and above.The TCS should be collected by the Manufacturer,dealer or the owner of a Motor Vehicle on ex-showroom price or on Invoice value and on selling price in case of second sale.
As Per Finance Minister this “levy not only advances collection of tax when the expenditure is incurred, but it provides data to tax authorities to identify the persons who incur such expenditure but may be missing from the tax base.”
- The TCS on Motor Vehicles shall be collected on Receipt basis.
- The TCS will be collected by all levels of supply chain like manufacturers dealer,sub dealer etc.
- Section 206 Sub section (1F) applies to all all motor vehicles like Cars,Buses trucks and two wheeler.
Here is SEC 206 C of Income tax says.
Under Sec 206 C sub section (1F) Says that “Every person, being a seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding ten lakh rupees, shall, at the time of receipt of such amount, collect from the buyer, a sum equal to one per cent. of the sale consideration as income-tax.”
The buyer has to pay extra 11000 for a car costing 11 Lakhs at the time of purchasing.However the TCS can be set off against the Total Income tax liability or can be claimed as a refund if the buyer does not falls under the taxable category of Income tax.
The TCS on Motor vehcile should be collected irrespective of the purposes.That is Whether for the use of taxi, personal use or any other use. Also irrespective of payment mode like cash cheque,loans etc.