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

TCS on sale of motor vehicle
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.