Car buyers to pay 1% extra tax on car purchase via cash

According to a report in Hindustan Times, the govt has decided to levy a 1 per cent tax collected at source (TCS) on purchase of motor vehicles made via cash payments of Rs 2 lakh or more. The move comes as part of the government's plan to crack down on black money and to widen the tax net by keeping a tab on unaccounted transactions.

Additionally, the government is set to charge 1 per cent tax on all vehicles costing more than Rs 10 lakh, notwithstanding the mode of payment of the transaction. Finance minister Arun Jaitley had proposed a levy on luxury cars of Rs 10 lakh or more in his budget speech early this year.

Meanwhile, all government departments, embassies, consulates, high commissions and institutions notified under the United Nations Privileges Act will be exempted from this tax, the income-tax department said in a clarification circular issued to field officers.