Photo: Pradeep Gaur/Mint
Photo: Pradeep Gaur/Mint

Costs related to car used for business can be reduced from your taxable business income

If the car is also used for personal purposes, the expenditure claimed as deduction could be disallowed to the extent of such use and you will need to maintain appropriate documents that evidence the use of the car for business purposes

I am planning to buy a new car and I have a business. Can I get exemption of depreciation for it?

—Nirav S.

Generally, expenditure incurred on running and maintaining (including depreciation) a car that is used for the purposes of your business can be reduced from your taxable business income. If the car is also used for personal purposes, the expenditure claimed as deduction could be disallowed to the extent of such use and you will need to maintain appropriate documents that evidence the use of the car for business purposes.

More details like whether the business carried out as sole proprietor/firm, cost of the car, nature of business/profession, etc. would be required to determine the exact eligibility for claim of depreciation and other expenses incurred.

I had booked a flat in the Delhi-NCR region in September 2015. I paid 5.5 lakh to the builder at the time of booking, 19 lakh in October 2015 and 5.5 lakh in March; both through a home loan. I had a total sale consideration of approximately 52 lakh. The property is under construction and will be handed over to me by mid-2019, only after which I can register it. I was not aware of the fact that I have to deduct TDS before paying the builders in the first two payments. How do I rectify this error? Will I have to pay a fine or interest of any kind? If yes, how much?

—Kartik

Tax is required to be withheld by the buyer of an immovable property from the amount paid to the seller, where the aggregate sale consideration being paid exceeds 50 lakh. The rate of tax to be withheld is 1% of the amounts paid to the seller (presuming the seller is a tax resident of India).

Such tax should be withheld at the time of each payment made to the seller. Once the taxes are withheld, the buyer is required to remit the tax withheld to tax authorities within 30 days from the end of the month in which the tax was withheld. The buyer will also need to file an online return (in Form 26QB) to furnish information about the tax withheld. This return is available on the Tax Information Network website.

Since you have not withheld taxes timely, you will need to deduct the applicable taxes now and remit them along with interest at 1% per month for the period of delay (i.e. from the month in which tax was required to be withheld until the month actually withheld). Even a part of the month of delay is considered as a full month of delay. Also, delay in withholding taxes could attract penalty (of up to the amount of tax not withheld timely). Further, the late filing of Form 26QB would attract a fee of 200 per day capped to the amount of TDS that has not been withheld timely.

To read more queries, go to livemint.com/askmintmoney

Parizad Sirwalla is partner and head, global mobility services, tax, KPMG in India. Queries and views at mintmoney@livemint.com

Close