Summary: The computation of Tax Collected at Source (TCS) and Goods and Services Tax (GST) on vehicle sales depends on the ex-showroom price, which includes the vehicle cost plus GST and cess but excludes registration, insurance, and road tax, as these are considered reimbursements where the seller acts as a pure agent. TCS at 1% under Section 206C(1F) is applicable when the ex-showroom price exceeds ₹10 lakh and is calculated on the GST-inclusive value, not just the base vehicle price. For instance, a vehicle priced at ₹9,00,000 after discount, with GST and cess, gives an ex-showroom value of ₹13,17,200 on which TCS of ₹13,172 is levied, taking the total to ₹13,30,372. Adding mandatory charges like registration, insurance, and road tax brings the on-road price to ₹13,70,372. While GST and cess apply to the vehicle price, no GST or TCS is charged on pure reimbursement charges, making the on-road price the true cost buyers should consider.
1. Introduction:
In this article, I am covering the computation of TCS on motor vehicles & GST valuation on other charges. Whether other charges fall in the definition of Pure agent. I am also covering the point whether GST & TCS will be levied at the time of sale of vehicles on the amount that excludes or includes these charges.
2. Computation:
I am explaining the computation of TCS & GST liability through a practical scenario. Suppose Mr Pappu intends to buy a vehicle.
| S. No. | Particulars | Rate | Amount |
| 1 | Vehicle price | 9,00,000 | |
| 2 | Discount | 10,000 | |
| 3 | Value after discount | 8,90,000 | |
| 4 | CGST | 14% | 1,24,600 |
| 5 | SGST | 14% | 1,24,600 |
| 6 | GST Cess | 20% | 1,78,000 |
| 7 | Ex showroom price | 13,17,200 | |
| 8 | TCS amount | 1% | 13,172 |
| 9 | Total | 13,30,372 | |
| 10 | Registration charges | 20,000 | |
| 11 | Insurance charges | 15,000 | |
| 12 | Road tax | 5,000 | |
| 13 | On road price | 13,70,372 |
a.Ex showroom price exceeds the limit. Hence, TCS will be collected at the time of sale.
b. TCS shall be collected on 13,17,200 cum GST & cess not on the vehicle base price i.e. 8,90,000.
c. Charges levied which is in the nature of pure reimbursement shall be excluded while computing the GST & TCS liability.
3. GST shall be levied on the cost of vehicle excluding other charges.
4. GST cess will be levied on the same amount on which GST has been charged. It’s increased the cost of buyers. In above example, cess is computed on vehicle price i.e. 8,90,000 instead of the GST amount.
5. Threshold limit for TCS:
TCS is levied at the time when consideration exceeds the Rs. 10,00,000.
6. TCS Rate:
TCS will be collected @1% on Ex showroom price.
7. TCS applicability:
If Ex showroom price exceeds the Rs. 10,00,000 then TCS will be collected under the Income Tax Act.
8. Ex showroom price:
It includes the cost of vehicles including GST but does not includes other charges like registration fees, road tax etc.
9. Registration charges:
The seller will not charge GST from the buyer when selling the vehicles, as it is a pure reimbursement with no margin included for the seller. The seller is acting as a pure agent, and in such cases, GST is not applicable.
10. Insurance charges:
The seller will not charge GST from the buyer when selling the vehicles, as it is a pure reimbursement with no margin included for the seller. The seller is acting as a pure agent, and in such cases, GST is not applicable.
11. Road Tax:
The seller will not charge GST from the buyer when selling the vehicles, as it is a pure reimbursement with no margin included for the seller. The seller is acting as a pure agent, and in such cases, GST is not applicable.
12. On road price:
It includes the cost of vehicles, GST and charges like registration fees, road tax etc.
13. On road price is always greater than ex showroom price.
14. Comparison chart:
| S No | Component | Ex-showroom Price | On-Road Price |
| 1 | Vehicle Base Cost | Included | Included |
| 2 | GST & GST cess | Included | Included |
| 3 | Road Tax / RTO Charges | Not Included | Included |
| 4 | Registration Fee | Not Included | Included |
| 5 | Insurance charges | Not Included | Included |
| 6 | TCS | Not Included | Included |
15. Always ask for the on-road price at the time of purchasing a vehicle instead of the ex-showroom price, as it reflects the actual cost that will be paid by the buyer.
16. Section 206C(1F) Bare Act:
(1F) Every person, being a seller, who receives any amount as consideration for sale of—
(i) a motor vehicle; or
(ii) any other goods, as may be specified by the Central Government by notification in the Official Gazette, of the value exceeding ten lakh rupees, shall, at the time of receipt of such amount, collect from the buyer, a sum equal to one per cent of the sale consideration as income-tax.
17. TCS liability on other charges:
TCS shall not be collected on various charges levied at the time of sale. These charges are in the nature of reimbursement in the form of mandatory charges levied by the seller at the time of selling of vehicle.
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Disclaimer: The views and opinions expressed in this article are those of the author. This article is intended for general information purposes only and does not constitute professional advice. Readers are strongly advised to consult a qualified professional for guidance specific to their individual situation before making any financial, legal, or tax-related decisions. The author shall not be held liable for any loss or damage of any kind incurred as a result of the use of this information or for any actions taken based on the content of this article.
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