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

Govt’s gamble on GST cuts: What do the bond and currency markets signal?

By
  It’s not just humans who suffer from cognitive biases; markets do too. Interestingly, different financial markets exhibit distinct biases, each interpreting events through its own prism of prejudice. Take the recent announcements on GST reforms: equity markets have chosen to view them through the lens of growth, while bond and currency markets are focusing on potential macroeconomic risks—fiscal pressures and current account challenges. So, which lens captures the true pulse?Equity markets may be right in expecting GST reforms to revive consumption, which has remained lacklustre for a while. But the key question remains—will this revival come at the cost of broader macro stability?It is well known that consumption stocks have rallied since the GST rationalisation announcement. But what about bond markets? What signals are they sending since this rejig was announced from the ramparts of the Red Fort?The signs aren't encouraging. Bond prices have slumped and yields have surged sinc...
Post a Comment
Read more

Luxury carmakers urge clarity on GST rates to boost festive season sales

By
  A clear picture regarding new GST rates at the earliest will help the overall auto industry, including the luxury car segment, to regain momentum in the ongoing quarter, which generally sees enhanced sales on account of the festive season.The high-powered GST Council, chaired by Finance Minister Nirmala Sitharaman, will meet on September 3-4 to discuss moving to a two-slab taxation.In an interaction with PTI, BMW Group India President and CEO Hardeep Singh Brar said the recent speculation about the change in GST rates has caused uncertainty in the minds of consumers.Consumer interest and demand is strong, but they (prospective buyers) have adopted a wait-and-watch approach, and this delayed decision-making is impacting new vehicle sales at a certain level, he noted."Expediting clarity on GST rates is essential to get back to speed and ensure the auto sector's contribution to economic growth during this quarter is robust," Brar stated.He also hoped that the sustainable p...
Post a Comment
Read more

Sebi proposes tighter norms for green bond third-party reviewers

By
  Sebi on Friday said it has proposed to tighten the norms to appoint independent third-party reviewers or certifiers for green debt securities to align them with requirements for other ESG-linked bonds.In a draft circular, Sebi said that the current norms for green bonds, introduced in February 2023, lack detailed requirements around reviewer independence, conflict of interest mitigation, and disclosure standards that are now in place for other ESG-linked securities under a June 2025 circular.The regulator's latest proposal seeks public comments on a revised framework that would bring parity by incorporating comprehensive criteria for third-party certifiers of green bonds on non-convertible securities.Under the proposed norms, issuers of green debt securities will need to appoint reviewers who are independent of their management, directors, and key managerial personnel. These reviewers will be remunerated in a way that prevents any conflicts of interest and possess relevant expert...
Post a Comment
Read more