Expensive cars and jewellery to become cheaper soon
New Delhi: The Central Board of Indirect Taxes and Customs (CBIC) brought huge relief to consumers of expensive cars and jewellery by regulating that the TCS amount would be excluded from the value of goods for computing GST liability.
Under the Income Tax Act, tax collection at source (TCS) is levied at 1 per cent on purchase of motor vehicles above Rs 10 lakh, jewellery exceeding Rs 5 lakh and bullion over Rs 2 lakh. TCS is also levied on other purchases at different rates.
The CBDT has clarified that TCS is not a tax on goods but an interim levy on the possible “income” arising from the sale of goods by the buyer and to be adjusted against the final income-tax liability.
“For the purpose of determination of the value of supply under GST, Tax collected at source (TCS) under the provisions of the Income Tax Act, 1961 would not be includible as it is an interim levy not having the character of tax,” the CBIC said.
Earlier in December, the CBIC had said that the TCS amount would also be included while ascertaining the GST liability on goods on which TCS is applicable under the I-T Act.
But after consultation with the Central Board of Direct Taxes (CBDT), the CBIC has decided to exclude the TCS amount paid while valuing the goods for the purpose to levy GST.