Individuals looking to buy a car priced Rs 10 lakh and above need to pay an extra amount towards Goods and Services Tax (GST) as per the latest order from Central Board of Direct Taxes (CBIC).
"It is clarified that... taxable value for the purposes of GST shall include the TCS [tax collected at source] amount collected under the provisions of the Income Tax Act since the value to be paid to the supplier by the buyer is inclusive of the said TCS," the CBIC said in a recent circular.
In other words, the consumers will have to cough up GST on the value of tax collected by an auto dealer. Since TCS is applicable on automobiles costing above Rs 10 lakh at the rate of 1% and is levied on the ex-showroom price, which includes applicable GST, these vehicles could get more expensive for consumers.
According to an Economic Times Report, the latest directive is expected to cause disruption in the telecom sector as well, especially due to the tower business which will now have to give GST and TCS on sale of scrap; mineral and coal sectors will also be affected.
If GST is ultimately levied on TCS, it would not only add to the total cost of the vehicle but also make the process complex for the customer.
