Budget 2024 proposes an amendment to sub-section (1F) of section 206C of the Income Tax Act, which currently mandates a 1% tax collected at source (TCS) on motor vehicle sales exceeding ten lakh rupees. The amendment aims to expand this provision to include other high-value goods, specifically luxury items, exceeding ten lakh rupees, as notified by the Central Government. This change is intended to better track high net worth individuals’ spending on luxury goods and to broaden the tax base. The amendment will come into effect on January 1, 2025, as outlined in Clause 70 of the Finance Bill 2024.
Budget 2024: TCS under sub-section (1F) of section 206C on notified goods
The existing provisions of section 206C of the Act provide, inter alia, for the collection of tax at source on business of trading in alcoholic liquor, forest produce, scrap etc. Sub-section (1F) provides that every person, being a seller, who receives any amount as consideration for sale of a motor vehicle 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.
2. It has been seen that there has been an increase in expenditure on luxury goods by high net worth persons. For proper tracking of such expenses and in order to widen and deepen the tax net, it is proposed to amend sub-section (1F) of section 206C to also levy TCS on any other goods of value exceeding ten lakh rupees, as may be notified by the Central Government in this behalf. Such goods would be in the nature of luxury goods.
3. The amendment will take effect from the 1st day of January, 2025.
Clause 70 of the Bill seeks to amend section 206C of the Income-tax Act relating to profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc.
It is proposed to substitute sub-section (1F) of the said section to extend its scope to, inter alia, provide that every person, being a seller, who receives any amount as consideration for sale of any other goods of value exceeding ten lakh rupees, as may be notified by the Central Government 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.
This amendment will take effect from 1st January, 2025.
Proposed Amendment to sub-section (1F) of section 206C of Income Tax Act, 1961 vide Finance Bill, 2024
In section 206C of the Income-tax Act, ––
(a) for sub-section (1F), the following sub-section shall be substituted with effect from the 1st day of January, 2025, namely:––
“(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.”;
