[sunilch]

Originally Posted by JayPrashanth

Not filing IT returns is not equal to 'not paying taxes'. Just saying.

Cheers,

Jay

I believe this is applicable only when the Ex-Showroom cost of 10L or more. So anyone who is earning enough and able to afford such a car should be liable to pay tax and hence file returns. Such a person, if not filling returns, is very likely to not pay taxes.

The only exception here I see is someone who is retired, earning just under 5L in a year (hence no taxable income) and wants to buy a car from his savings.

That will be a very limited number of buyers but still a valid one who will get forced to pay higher TDS.

But by large, this is a good initiative. In fact two things should be done:

1) High GST or TDS on you for any such Luxury buy if you don't file tax returns
2) Lower GST or TDS for you if you do file returns every-year say for last 5+ years.

That way it will help honest payers and penalize evaders.

[prajwalmr62]

Originally Posted by N.A.GTC

A fresh out of college graduate making, say, 4.8L per annum. ...

If they are working, then there's a company paying them salary and providing them Form 16. It is an exercise every company goes through.

If one is ignorant enough not file ITR in 3 years of professional life, probably they won't be aware to understand everyone else is paying 1% TCS.

Also, many banks already ask ITR details while getting a car loan.

[Mohan Mathew A]

So what about NRIs and other exempted categories like senior citizens above 75 (with only interest and pension income)? What are they supposed to do? Do they have to file returns just for this purpose

[N.A.GTC]

Originally Posted by prajwalmr62

If they are working, then there's a company paying them salary and providing them Form 16. It is an exercise every company goes through.

Non-salaried professionals. For instance, lawyers.
My clients aren't sending me any Form 16.

If one is ignorant enough not file ITR in 3 years of professional life, probably they won't be aware to understand everyone else is paying 1% TCS.

So the logic is to punish "ignorance"? I thought it was to curb tax evasion.

Plus, I just told you of a legitimate scenario where a person would not have to file an ITR but be in a position to buy a car.

Also, many banks already ask ITR details while getting a car loan.

That isn't really relevant to the scenario we're discussing, is it?

[m8002?]

Originally Posted by N.A.GTC

Non-salaried professionals. For instance, lawyers.
My clients aren't sending me any Form 16.

So the logic is to punish "ignorance"? I thought it was to curb tax evasion.

Plus, I just told you of a legitimate scenario where a person would not have to file an ITR but be in a position to buy a car.
?

They are asking for ITR and not Form16. If you are a businessman or consultant, you will still have to file your taxes. You actual tax paid can be 0.

Even in your case of first time employee, if he has PAN, the TCS can be claimed at the end of the year. Like someone earlier mentioned, it does mean some capital is held up for max 1 year.
But how many cases do you know where someone has just started with a salary of 5 lacs per annum but is ready to buy a car costing 12 lacs on road.

[sanchari]

The reason is also to catch many tax evaders. Many self-employed professionals/business people etc don't declare all their income. Some have multiple PAN cards, and use that. That is one of the reasons for PAN-Aadhar linkage, but the deadline for that is getting extended for last 2 years. There were also reports of IT department now using big data to analyze large spendings. If anyone purchases a air ticket for foreign travel, big vehicle purchases etc, all of them are going to be analyzed and IT will start asking people for source of their fund for big ticket purchases.

Even for senior citizens, only those whose source of income is pensions and bank interest and above 75 years is exempted from filing returns. The number of such people buying a car above 10 lakhs is pretty less. The most they will need to do is to file taxes that year and claim reimbursement.

[anandhsub]

TCS is not an extra tax. It is just tax collected at source.

The TCS mainly impacts people who have agri income which is not taxable. The IT department knows who these people are and then tries to verify whether the income was actually from agri business or it was misrepresentation.

For those with salaried income that is not taxable, they should ideally still be filing returns.

However even if they arent filing returns the refund is no questions asked. All they need to do is file the return for this year showing the taxable income is 0. If you are buying an expensive car I think one would have resources to do this much.

[Futhead]

In my case, I wanted my Troc registration on my spouse name. Bank of Baroda has sourced loan on my name as I’m co-applicant along with my spouse and hypothecation was done accordingly by the bank. At the time of final invoicing ,dealer asked me to pay additional 5% as TCS if ITR is not filed by the owner.
I didn’t understand why ITR should be filed by the owner even though he/ she is not paying the EMIs. Dealer didn’t have an answer for that though.
Fortunately my spouse was on ML from past 1 yr and I could able to provide ITR and also respective assessment year’s acknowledgements to dealer for restricting TCS to 1%.

If I would like to register car on my spouse whose occupation is Housewife, what would be the process then?

[sanchari]

Originally Posted by Futhead

In my case, I wanted my Troc registration on my spouse name. Bank of Baroda has sourced loan on my name as I’m co-applicant along with my spouse and hypothecation was done accordingly by the bank. At the time of final invoicing ,dealer asked me to pay additional 5% as TCS if ITR is not filed by the owner.
I didn’t understand why ITR should be filed by the owner even though he/ she is not paying the EMIs. Dealer didn’t have an answer for that though.
Fortunately my spouse was on ML from past 1 yr and I could able to provide ITR and also respective assessment year’s acknowledgements to dealer for restricting TCS to 1%.

If I would like to register car on my spouse whose occupation is Housewife, what would be the process then?

I believe they just need to file ITR that year , and claim reimbursement for the tax paid as income is 0.

While this might sound cumbersome, this is what many business people/politicians etc do to avoid taxes etc, show funds in the name of their family members. That is how some politicians have crores in the accounts of their old mom, 2-3 year old child/grandchild etc

[tiagoatrix]

1. What about NRI's purchasing car in india?

2. Will the government refund TCS or Road tax or GST if there's pot hole in the road?

3. Will the government / manufacturers reimburse / compensate if the car fails in the middle of no where, carrying your family?

4.With no standardised crash testing or whatsoever, why should I keep paying more and more in taxes?

5.Will this 5% TCS applicable for newly purchased PM's aircraft (bought using our money)?

6. Relentless hiking of fuel prices and selling adulterated fuel at a premium?

I'd love to pay more taxes if those taxes are reciprocated in real development. Sadly the standard of infrastructure and technology is not upto what the taxes are charged.

[matizcrazy]

As always, wild allegations and insinuations will be made against the lawmakers; also specific situations will be quoted in an attempt to establish the rule as being thoughtless.
This rule doesn't insist that you should keep filing IT returns, even if you are in the exempt category, merely to prevent TCS in future when you buy a new vehicle.
It only seeks that a person, who has enough money to buy a new vehicle, should keep a small sum with the Govt, just 5 pc, so that the Govt can get an idea where your money is coming from in the subsequent IT return that you will file, in order to claim a refund.
I don't see why anyone should have a problem unless he has no intention of paying taxes / filing returns / divulging his source of income to the Govt of India.
This is not EXTRA tax, by the way.

[warrioraks]

I actually don’t understand this. Initially I thought this will target people who don’t pay taxes and stay under the radar by purchasing cars in the names of their family members. But on some more thinking, not sure how this would work except this being another procedural hassle for honest citizens and a way to fill up government coffers without addressing for the root cause.

Let’s say person ‘X’ bought a car worth 20 lacs but hasn’t been filing ITRs. They will need to shell 1 lac as TCS. If the person is actually a tax evader, they would have definitely saved way more than 1 lac over the years. Would they really worry about filing an ITR in that case? How does that solve the problem of tax non compliance?

Seems a band-aid solution to a brain injury problem.

[itwasntme]

Originally Posted by warrioraks

Let’s say person ‘X’ bought a car worth 20 lacs but hasn’t been filing ITRs. They will need to shell 1 lac as TCS. If the person is actually a tax evader, they would have definitely saved way more than 1 lac over the years. Would they really worry about filing an ITR in that case?

You're partly correct. The extra 4% will not make him/her plan ahead for 2 years prior to the car purchase and file ITRs. What it will do is flag his/her name & PAN in the IT Department's OLTASS system, to automatically match with other known 'notified' and/or high value purchases.

I can guarantee you that the person will receive an automated enquiry about his/her "ITR-free" status within the next assessment year. . If I were that person and had nothing to hide, I would be sanguine about the same.

[warrioraks]

Originally Posted by itwasntme

What it will do is flag his/her name & PAN in the IT Department's OLTASS system, to automatically match with other known 'notified' and/or high value purchases.

I can guarantee you that the person will receive an automated enquiry about his/her "ITR-free" status within the next assessment year. . If I were that person and had nothing to hide, I would be sanguine about the same.

Why deduct TCS for that. The same can be done just by registering PAN of the owner with every car purchase and comparing against ITR database. No?

[ani_meher]

Originally Posted by warrioraks

Why deduct TCS for that. The same can be done just by registering PAN of the owner with every car purchase and comparing against ITR database. No?

Yep. I think this extra TCS helps pay the salary of employees to catch the tax evaders at their own cost! Truly a business mind.

For people giving all sort of excuses about low/zero taxable income/senior citizens etc, you can anyways file a zero tax due form 16. For people claiming 'indirect taxes are taxes too', maybe treat this additional 4% as indirect tax, which other direct payers pay through their nose via income slabs. People buying from own income and paying taxes can be unaffected. For non-earning people getting cars as gifts out of love or respect or any other thing, the gift giver will have to add 4% more to his love.