TCS on Sale of any Motor Vehicle of the value exceeding Rs.10 Lakh [Section 206C(1F)]

Every person, being 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.

The Provisions of Section 206C(1F) are given below :

1. Section 206C(1F) has been brought to cover all transactions of retail sales and accordingly it will not apply on sale of motor vehicles by manufacturers to dealers/distributors.

2. The seller shall collect the tax @ 1% from the purchaser on sale of any motor vehicle (and not from purchaser of Luxury Cars only) of the value exceeding Rs.10,00,000.

3. Section 206C(1F) is applicable to each sale and not to aggregate value of sale made during the year.

Meaning of "Seller" [Explanation (c) to section 206C]:

"Seller" under Section 206C(1F) means:

1. the Central Government, or

2. a State Government, or

3. any local authority, or

4. corporation or authority established by or under a Central, State or Provincial Act, or

5. any company, or

6. firm, or

7. co-operative society.

8. 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)

"Buyer" with respect to—

1. 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,—

   1. 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

   2. a buyer in the retail sale of such goods purchased by him for personal consumption;

2. “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,—

   1. the Central Government, a State Government and an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; or

   2. a local authority as defined in Explanation to clause (20) of section 10; or

   3. 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).

1. the Central Government,

2. a State Government,

3. an embassy,

4. a High Commission,

5. legation,

6. commission,

7. consulate and

8. the trade representation of a foreign State;

9. local authority as defined in explanation to clause (20) of section 10;

10. a public sector company which is engaged in the business of carrying passengers,