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Weekdays or Weekends: Which is best to buy a new car?
MUMBAI: The indirect tax department is scrutinising discounts and freebies offered to customers by major car dealers across the country on suspicion that they may have availed input tax credit on those freebies without paying GST , leading to revenue leakage for the exchequer. The department has issued preliminary notices to some of the top car dealerships, seeking details of discounts offered by them including freebies, people with direct knowledge of the matter told ET.
Based on the information sought by the tax department in the preliminary notices, tax experts said the investigation is around taxes paid and input tax credit claimed during transition from old tax framework to the goods and services tax GST regime. Under transitional credit, at the time of paying GST a company can claim credit on taxes such as excise duty already paid on inputs under the previous tax regime.
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Dealers of major car companies, including Maruti Suzuki, Honda, Hyundai, Toyota and Tata Motors, have been issued preliminary enquiry letters, said a person with direct knowledge of the matter. The tax department is scrutinising whether the tax treatment of the discounts while transitioning from old tax regime to GST was done properly, sources said.
The taxman is also looking into how car dealers have calculated and claimed input tax credits on freebies offered to customers. Car dealers normally offer discounts and free products to customers when they buy cars. But they are not uniform; dealers tend to offer discounts and freebies depending on their sales.
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