I sell cars. When must I collect one per cent under s.206C(1F), and does it now catch anything besides motor vehicles?
Sub-section (1F) requires every person being a seller who receives any amount as consideration for the 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, to collect one per cent of the sale consideration from the buyer at the time of receipt of such amount. The second limb — 'any other goods, as may be specified by the Central Government by notification' — was brought in by Act No. 15 of 2024 with effect from 1 January 2025 (footnote 22 on the departmental page).
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 2025-01-01, reported as Income-tax Act, 1961, s.206C(1F), as substituted with effect from 1 January 2025. It bears on section 206C(1F), section 206C, section 206CC, section 206C(6A), section 10(20) of the Income Tax Act 1961, in TDS Defaults and How Tax Law Is Read matters.
Three things trip sellers up. First, the trigger is receipt, not sale or invoice: the sub-section says 'at the time of receipt of such amount', with none of the 'debiting or receipt, whichever is earlier' language that sub-sections (1) and (1G) carry. Second, the base is 'the sale consideration', and the threshold is on 'the value exceeding ten lakh rupees' — so once the value crosses the line the one per cent runs on the consideration, not on the excess. Third, and least noticed, 'buyer' for this sub-section is separately defined in Explanation clause (aa)(iii) with a narrower exclusion list than the one that applies to sub-section (1): only the Central Government, a State Government, an embassy, High Commission, legation, commission, consulate and the trade representation of a foreign State; a local authority as defined in the Explanation to s.10(20); and a public sector company engaged in the business of carrying passengers. There is no exclusion for a buyer purchasing in retail for personal consumption — that carve-out lives in clause (aa)(i) and applies only to sub-section (1). 'Seller' for sub-sections (1) and (1F) is defined in Explanation clause (c) and takes in an individual or Hindu undivided family only where total sales, gross receipts or turnover exceed one crore rupees in business or fifty lakh rupees in profession in the immediately preceding financial year.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
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The sub-section as printed reads: '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.' Explanation clause (aa)(iii) defines 'buyer' with respect to sub-section (1F) as a person who obtains in any sale goods of the nature specified in that sub-section, but excludes (A) the Central Government, a State Government and an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; (B) a local authority as defined in the Explanation to clause (20) of section 10; and (C) a public sector company which is engaged in the business of carrying passengers. Explanation clause (c) defines 'seller' with respect to sub-sections (1) and (1F) as the Central Government, a State Government or any local authority or corporation or authority established by or under a Central, State or Provincial Act, or any company or firm or co-operative society, and also includes an individual or Hindu undivided family whose total sales, gross receipts or turnover from the business or profession carried on by him exceed one crore rupees in case of business or fifty lakh rupees in case of profession during the financial year immediately preceding the financial year in which the goods are sold.
One per cent is collectible by the seller, at the time of receipt of the consideration, on the sale of a motor vehicle of a value exceeding ten lakh rupees, and from 1 January 2025 on any other goods of that value which the Central Government specifies by notification in the Official Gazette. The buyer exclusions for this sub-section are those in Explanation (aa)(iii) and do not include a retail buyer purchasing for personal consumption; the seller must satisfy Explanation (c), which for an individual or HUF turns on the preceding year's turnover.
Not applicable — this is a statement of the statutory text as printed on the departmental section pages, with the commencement date taken from the footnote apparatus on the same pages.
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.
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Handle my notice → Ask a CA on WhatsAppSub-section (1F) requires every person being a seller who receives any amount as consideration for the 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, to collect one per cent of the sale consideration from the buyer at the time of receipt of such amount. The second limb — 'any other goods, as may be specified by the Central Government by notification' — was brought in by Act No. 15 of 2024 with effect from 1 January 2025 (footnote 22 on the departmental page). This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 206C(1F), section 206C, section 206CC, section 206C(6A), section 10(20) of the Income Tax Act 1961. It is reported as Income-tax Act, 1961, s.206C(1F), as substituted with effect from 1 January 2025. Three things trip sellers up. First, the trigger is receipt, not sale or invoice: the sub-section says 'at the time of receipt of such amount', with none of the 'debiting or receipt, whichever is earlier' language that sub-sections (1) and (1G) carry. Second, the base is 'the sale consideration', and the threshold is on 'the value exceeding ten lakh rupees' — so once the value crosses the line the one per cent runs on the consideration, not on the excess. Third, and least noticed, 'buyer' for this sub-section is separately defined in Explanation clause (aa)(iii) with a narrower exclusion list than the one that applies to sub-section (1): only the Central Government, a State Government, an embassy, High Commission, legation, commission, consulate and the trade representation of a foreign State; a local authority as defined in the Explanation to s.10(20); and a public sector company engaged in the business of carrying passengers. There is no exclusion for a buyer purchasing in retail for personal consumption — that carve-out lives in clause (aa)(i) and applies only to sub-section (1). 'Seller' for sub-sections (1) and (1F) is defined in Explanation clause (c) and takes in an individual or Hindu undivided family only where total sales, gross receipts or turnover exceed one crore rupees in business or fifty lakh rupees in profession in the immediately preceding financial year. If it applies to you, the first step is this: Check the value of the goods, not the amount of the instalment: the threshold is on goods 'of the value exceeding ten lakh rupees', while collection is on receipt of the amount.
The sub-section as printed reads: '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.' Explanation clause (aa)(iii) defines 'buyer' with respect to sub-section (1F) as a person who obtains in any sale goods of the nature specified in that sub-section, but excludes (A) the Central Government, a State Government and an embassy, a High Commission, legation, commission, consulate and the trade representation of a foreign State; (B) a local authority as defined in the Explanation to clause (20) of section 10; and (C) a public sector company which is engaged in the business of carrying passengers. Explanation clause (c) defines 'seller' with respect to sub-sections (1) and (1F) as the Central Government, a State Government or any local authority or corporation or authority established by or under a Central, State or Provincial Act, or any company or firm or co-operative society, and also includes an individual or Hindu undivided family whose total sales, gross receipts or turnover from the business or profession carried on by him exceed one crore rupees in case of business or fifty lakh rupees in case of profession during the financial year immediately preceding the financial year in which the goods are sold. The matter was decided on 2025-01-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. One per cent is collectible by the seller, at the time of receipt of the consideration, on the sale of a motor vehicle of a value exceeding ten lakh rupees, and from 1 January 2025 on any other goods of that value which the Central Government specifies by notification in the Official Gazette. The buyer exclusions for this sub-section are those in Explanation (aa)(iii) and do not include a retail buyer purchasing for personal consumption; the seller must satisfy Explanation (c), which for an individual or HUF turns on the preceding year's turnover.
Not applicable — this is a statement of the statutory text as printed on the departmental section pages, with the commencement date taken from the footnote apparatus on the same pages. In the words reproduced by the source cited on this page: "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."
It was decided by the CBDT Circulars & Instructions on 2025-01-01 and is reported as Income-tax Act, 1961, s.206C(1F), as substituted with effect from 1 January 2025. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 206C(1F), section 206C, section 206CC, section 206C(6A), section 10(20), the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. One per cent is collectible by the seller, at the time of receipt of the consideration, on the sale of a motor vehicle of a value exceeding ten lakh rupees, and from 1 January 2025 on any other goods of that value which the Central Government specifies by notification in the Official Gazette. The buyer exclusions for this sub-section are those in Explanation (aa)(iii) and do not include a retail buyer purchasing for personal consumption; the seller must satisfy Explanation (c), which for an individual or HUF turns on the preceding year's turnover. It arises in TDS Defaults and How Tax Law Is Read matters, on section 206C(1F), section 206C, section 206CC, section 206C(6A), section 10(20) of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Before treating any non-vehicle sale as covered, find the actual Gazette notification — the second limb is empty until the Central Government specifies goods, and no notification under it was retrieved this pass. Run the buyer through Explanation (aa)(iii), not (aa)(i): a private individual buying a car for personal use is a 'buyer' for s.206C(1F), because the retail-personal-consumption exclusion does not extend to this sub-section. If you are an individual or HUF seller, test the preceding year's turnover against the one crore / fifty lakh rupee limits in Explanation (c) before accepting that you are a 'seller' at all. Collect PAN: s.206CC(1) requires the collectee to furnish PAN, failing which tax is collected at twice the specified rate or five per cent, whichever is higher. Issue Form 27D and report the collection in the quarterly statement; note that the first proviso to s.206C(6A), which saves a collector from being an assessee in default where the buyer has returned and paid, is worded for sub-sections (1) and (1C) only and does not on its face reach sub-section (1F) — and that this confinement is itself an amendment: the departmental page stamped Year 2018 prints the same proviso opening "any person responsible for collecting tax in accordance with the provisions of this section", with no restriction to particular sub-sections at all.
Still good law. Read on two departmental pages stamped Year 2025 and Year 2026 which print the sub-section identically. No Finance Act text was retrieved this pass and no later amendment was searched for beyond those two pages. Anything describing s.206C(1F) as confined to motor vehicles states the position before 1 January 2025. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Sub-section (1F) and Explanation clauses (aa)(iii) and (c) were transcribed this pass from https://incometaxindia.gov.in/w/section-206c-36 (Year: 2025) and independently from https://incometaxindia.gov.in/w/section-206c-39 (Year: 2026); the two pages print identical text. The dating of the 'any other goods' limb rests on footnote 22 printed on the -36 page, which reads 'Sub. by Act No. 15 of 2024, w.e.f. 1-1-2025'; the departmental footnotes identify amending Acts by number only, and the correspondence of Act No. 15 of 2024 to the Finance (No. 2) Act 2024 was NOT verified from a source read this pass. No notification specifying 'other goods' under this sub-section was retrieved this pass, and none should be assumed to exist. The point that the s.206C(6A) first proviso is worded for sub-sections (1) and (1C) is taken from the text of that proviso as printed on both pages; no decision on whether it can be read across to sub-section (1F) was located. Independently corroborated this pass on https://incometaxindia.gov.in/w/section-206c-38 (Year: 2019 (No. 1)), headed "Income-tax Act, 1961" and "Profits and gains from the business of trading in alcoholic liquor, forest produce, scrap, etc", which prints sub-section (1F) as a single undivided sentence confined to "a motor vehicle of the value exceeding ten lakh rupees" — so the "any other goods" limb, and the clause (i)/(ii) structure, are genuinely later additions and not a rendering artefact of the current page. The date in 'decided_on' is the date from which the position stated takes effect, not a decision date. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
One per cent is collectible by the seller, at the time of receipt of the consideration, on the sale of a motor vehicle of a value exceeding ten lakh rupees, and from 1 January 2025 on any other goods of that value which the Central Government specifies by notification in the Official Gazette. The buyer exclusions for this sub-section are those in Explanation (aa)(iii) and do not include a retail buyer purchasing for personal consumption; the seller must satisfy Explanation (c), which for an individual or HUF turns on the preceding year's turnover.
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