Section 206C(1F): Analysis Of TCS on Sale of Motor Vehicle

Section 206C(1F)- TCS on Sale of any Motor Vehicle:

• As per section Section 206C(1F) TCS is applicable if the consideration consideration for sale of a motor vehicle of the value exceeding Rs.10,00,000.
• Here the TCS is applicable only in case of motor vehicle at retail level.No TCS under this section on sale by manufacturing to dealers/ distributors.
• Threshold limit of Rs 10,00,000 has to be on each individual purchase and not on aggregate purchases made during the year.

Who will Collect the Tax ?

A seller, who receives any amount as consideration for sale of a motor vehicle of the value exceeding Rs.10,00,000, shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 1% of the sale consideration as income-tax.

Meaning of Seller:

“Seller” under Section 206C(1F) means:

• The Central Government, or
• A State Government, or
• any local authority, or
• corporation or authority established by or under a Central, State or Provincial Act, or
• any company, or
• firm, or
• co-operative society.

includes an individual or a Hindu undivided family whose books of account are required to be audited under section 44AB(a)/(b) during the financial year immediately preceding the financial year in which goods are sold. Consequently, tax will be collected at source by such individuals/Hindu undivided families.

Meaning of “buyer” under Section 206C(1F):

Meaning of “buyer” under Section 206C(1F)

“Buyer” with respect to—

section 206C(1) means a person who obtains in any sale, by way of auction, tender or any other mode, goods of the nature specified in the Table in sub-section (1) or the right to receive any such goods but does not include,—

• a public sector company, the Central Government, a State Government, and an embassy, a High Commission, legation, commission, consulate and the trade representation, of a foreign State and a club; or
• a buyer in the retail sale of such goods purchased by him for personal consumption;

“sub-section (1F) 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.”

Buyers Exempted related to TCS on Motor Vehicle as per Section 206C(1F):

The Act has Exempted the following Class of Buyers such as … from the applicability of the provision of sub-section (1F) of section 206C of the Act (relating to TCS on motor vehicle).

• the Central Government,
• a State Government,
• an embassy,
• a High Commission,
• legation,
• commission,
• consulate and
• the trade representation of a foreign State;
• local authority as defined in explanation to clause (20) of section 10;
• a public sector company which is engaged in the business of carrying passengers,

Due date for payment of TCS:

Due Date of TCS Returns: