TCS on sale of motor vehicle-Section 206C(1F)

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.

Summary of Section 206C (1F) of the Income Tax Act

• Specified Goods: Motor vehicle
• Applicability: This sub-section is applicable from 01-06-2016
• Collector: Every person who sale the motor vehicle (All type of sellers)
  • Example:
    • It includes not only to businesses that sell goods or provide services, even a salaried employee who sells a car for more than Rs.10 lakhs, would need to collect TCS.
    • Even a vehicle manufacturer selling vehicles to dealers, and a dealer selling those vehicles to customers, would need to collect TCS.
• Buyer: Specified buyer (Defined below)
• Threshold Limit: Exceeding Rs. 10,00,000/-
• Rate of TCS: TCS @ 1% of the sale consideration
• Time of collection: At the time receipt of sale consideration
• Point to be Noted:
  • “Motor vehicle” include all types of vehicles-
    • Two-wheelers (such as motorcycles), motor cars, SUVs, trucks and buses. Second hand sales would also be subject to TCS, if the sale value exceeds Rs.10 lakhs.
  • Sale consideration calculation-
    • Value of GST should be included in the sales consideration to collect TCS.
    • TCS is to be calculated on Ex-showroom price
• Specified Buyer means for the purpose of sub-section 206C(1F):
  “Buyer” means a person who obtains in any sale, goods of the nature specified in the said sub-section, but does not include, —
  • the Central Government,
  • a State Government and
  • an embassy,
  • a High Commission,
  • legation,
  • commission,
  • consulate and the trade representation of a foreign State; or
  • a local authority as defined in Explanation to clause (20) of section 10; or
  • a public sector company which is engaged in the business of carrying passengers.