Government of India has recently issued Circular no 22/2016 dated June 8, 2016 to provide clarifications regarding amendment in Sec 206C of Income Tax Act.
Section 206C relates to provisions for tax collected at source (TCS). With effect from June1, 2016, certain transactions were included in the ambit of TCS including tax collection on sale of any motor vehicle for value exceeding Rs 10 lac via sec 206C(1F).
There was an ambiguity relating to the definition of seller whether it extends to individual or not. We took position in our previous article based on reading of the section that the provision is not applicable to the individual as it does not cover reference to sub-section (1F)
Definition of seller as given in clause (c) of the Explanation below subsection (II) of section 206C is reproduced here for your reference:
“seller” means the Central Government, 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 and also includes an individual or a Hindu undivided family whose total sales, gross receipts or turnover from the business or profession carried on by him exceed the monetary limits specified under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which the goods of the nature specified in the Table in sub-section (1) or sub-section (1D) are sold or services referred to in sub-section (1D) are provided.
However, now the clarification has been provided to include individual whose accounts are liable to be audited under Section 44AB i.e. cases covered under tax audit.
Clarification provided reads as follows:
The definition of “Seller” as given in clause (c) of the Explanation below subsection (II) of section 206C shall be applicable in the case of sale of motor vehicles also Accordingly, an individual who is liable to audit as per the provisions of section 44AB of the Act during the financial year immediately preceding the financial year in which the motor vehicle is sold shall be liable for collection of tax at source on sale of motor vehicle by him.
We advise you to go by the circular issued to avoid any disputes.
You can refer our detailed article on this matter using the link below:
The circular providing circular can be accessed using the following link: