Consumers of high valued cars and jewellery will get some price relief as the Central Board of Indirect Taxes and Customs (CBIC) said that it will be excluding TCS amount on these goods for computation of GST.
As per the Income Tax Act, TCS (Tax Collected at Source) at the rate of 1 percent is levied on the purchase of motor vehicles priced over Rs 10 lakh, jewellery over Rs 5 lakh and bullion over Rs 2 lakh. TCS is collected by the Tax Department at varying rates based on the type of purchase.
In a recent circular, the CBIC said that the TCS amount would be excluded from the value of the goods for computing the Goods and Services Tax (GST) liability.
Earlier in December, the CBIC had decided to include TCS in the computation of GST, however, after receiving representations from various stakeholders and after consultation with the CBDT (Central Board of Direct Tax), it was decided to withdraw it.
It was clarified by the CBIC that TCS is not a tax on the goods but an interim levy on the possible "income" that could come from the sale of goods by the buyer and to be adjusted against the final income-tax liability.
"For the purpose of determination of 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," it said.