Skip to main content

1% Tax to be Levied on Car Purchase via Cash

By
Tax will be imposed if payment exceeds Rs.10L or there is a cash payment of over Rs.2L

Buyers of cars and premium two-wheelers who pay more than Rs.2 lakh of purchase price in cash will be levied 1% tax as part of the government's drive to  stifle the black economy.

Finance minister Arun Jaitley had announced 1% tax collected at source (TCS) on cars costing more than Rs.10 lakh in his budget speech.

Now, Central Board of Direct Taxes (CBDT) has clarified that car dealers have to collect this tax on every motor vehicle sale to individuals where payment exceeds Rs.10 lakh or there is a cash payment of over Rs.2 lakh.

The apex direct taxes body has issued detailed clarification in form of frequently asked questions on the applicability and scope of TCS on sale of motor vehicles following an amendment in this regard in the Finance Act, 2016. The Finance Act has expanded the scope of Section 206 C of the Income Tax Act to include in its ambit sale of goods and service exceeding Rs.2 lakh and sale of motor vehicles over Rs.10 lakh.

Thus, any high-end sale of any goods or service of over Rs.2 lakh in cash would now face 1% TCS.

The move is to discourage deployment of cash in high-end purchases as part of the Narendra Modi-led NDA government's drive against black money. CBDT has said that TCS on mo tor-vehicle sale shall apply only at retail level and not on sale by manufacturers to dealers or distributors. It would apply on each sale of motor vehicle and not on aggregate value of sale made during the year by the retailer.

TCS provisions on sale of services and goods was introduced to kill the deployment of domestic black money through high-end purchases in India and therefore discourage its generation itself, said Amit Maheshwari, partner at Ashok Maheshwary & Associates LLP.
 
The Economic Times, New Delhi, 09 June 2016

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Healthy balance sheets augur well for economy: RBI Governor Sanjay Malhotra

By
  Large tariffs by the United States administration and elevated geopolitical risk have increased near-term global financial stability risks, and along with weather events pose downside risks to domestic growth, Reserve Bank of India(RBI) Governor Sanjay Malhotra said in the foreword to the Financial Stability Report released today.Noting that domestic growth momentum is buoyed by strong domestic drivers, sound macroeconomic fundamentals and prudent policies, Malhotra said: “External spillovers and weather-related events could pose downside risks to growth.”On the other hand, he said the outlook for inflation is benign, and there is greater confidence in the durable alignment of inflation with the Reserve Bank’s target.Commenting that the structural shifts reshaping the global economy are making policy intervention challenging, the Governor emphasised the need for central banks and financial sector regulators to remain vigilant, prudent and agile in safeguarding their economies and...
Post a Comment
Read more