Buying Car On Cash or Loan? Income Tax Problems


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Hello experts,

I just booked new swift vxi. And in just 2 days am getting delivery of my car but problem is Am still not sure whether to finance it or buy it on cash.

Am just thinking if i buy on cash than Can it be any problem from Income tax department ? and can they question about source of money ?

PS- Am just a student and working online, my income is online and not on papers. So i don't pay taxes and i don't even have ITR of previous years.

So, If i don't have ITR then no chance of Loan and only choice left is buy on cash. Is it fine if i pay 5.23 lakhs cash . ?

Thanks
Need experts advice. :)
 
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Re: Swift VXi Cash or Loan - IT Problems

if your not paying income tax you can be in trouble man. its illegal!

people here dont discuss illegal matters!
 
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Re: Swift VXi Cash or Loan - IT Problems

It entirely depends on ITR personnel. However 5.23 l cash is a huge amount and if you get caught, which is more likely as you need PAN card for registration (if I am not wrong). If cash=cheque from your account then minimum possibility of you getting caught.

Well I agree with dodge 100%.
 
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Re: Swift VXi Cash or Loan - IT Problems

Dont you need a pan card number to buy a new car????
They ask you pan cards for a bank account these days,why not a new car!
Topic seems a bit unrealistic
 
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Re: Swift VXi Cash or Loan - IT Problems

if your not paying income tax you can be in trouble man. its illegal!

people here dont discuss illegal matters!
May not be illegal. Maybe he does not come in the tax bracket.

It entirely depends on ITR personnel. However 5.23 l cash is a huge amount and if you get caught, which is more likely as you need PAN card for registration (if I am not wrong). If cash=cheque from your account then minimum possibility of you getting caught.

Well I agree with dodge 100%.
Dont you need a pan card number to buy a new car????
They ask you pan cards for a bank account these days,why not a new car!
Topic seems a bit unrealistic
AFAIK Pan card is not required for registration. You need a photo identity and an address proof. Could be on 1 or 2 documents. Ex. Pan Card as photo id and Ration Card as address proof. Otherwise you can use a Voters ID (EPIC) which has a photo as well as the address.
ITR is only required when taking a loan for the car. Most car dealers are willing to accept full cash. I once checked if Hyundai would sell me an Accent on full cash and they said ok. Problem was I didn't have that much cash.
There is no problem is paying cash. Cash does not mean Black Money. You could have sold your old car (say a Swift VDI) for 4 lahks and then purchase a smaller new car for upto 4 Lakhs. Nothing illegal here.
 
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TSIVipul

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Re: Swift VXi Cash or Loan - IT Problems

Well,dear Delhiair,I'd recommend you to first of all talk to an advocate(this is what I am taught by my father-any problem,advocate is the solution) and then proceed further.We people also buy the cars on cash,but everytime we do it,we need to give a copy of PAN card too at the time of registration as the dealership people need to produce it in front of the bank at the time they deposit the money in the account.
If you have the FORM 16 with you,then you can buy anything on cash in India and if you don't fill the ITR or Income tax,then this will definitely lend you in trouble.
So,its better either you go the used car way.
Meet the advocate and either get your PAN card made and after you pay your taxes,you can buy the car.
Yes,I forgot to mention,ask either your parents or any close relative or uncle that if they can do a favor to you,what the favor is?Let me explain you:-
Pay the the whole money in cash and take a cheque of the same amount from them.Result:This will become a gift and now you can buy anything.
Yes,they will encounter IT department,but then you can fill the tax for them.(Condition:They must have enough income to show that from where they got this money..)

BTW without a PAN card how will you get your online income in your bank account,as much I remember for any transaction higher than 50,000 the PAN card number is mandatory.And how will you make any heavy transaction?
 
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Thread Starter #7
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Re: Swift VXi Cash or Loan - IT Problems

Well,dear Delhiair,I'd recommend you to first of all talk to an advocate(this is what I am taught by my father-any problem,advocate is the solution) and then proceed further.We people also buy the cars on cash,but everytime we do it,we need to give a copy of PAN card too at the time of registration as the dealership people need to produce it in front of the bank at the time they deposit the money in the account.
If you have the FORM 16 with you,then you can buy anything on cash in India and if you don't fill the ITR or Income tax,then this will definitely lend you in trouble.
So,its better either you go the used car way.
Meet the advocate and either get your PAN card made and after you pay your taxes,you can buy the car.
Yes,I forgot to mention,ask either your parents or any close relative or uncle that if they can do a favor to you,what the favor is?Let me explain you:-
Pay the the whole money in cash and take a cheque of the same amount from them.Result:This will become a gift and now you can buy anything.
Yes,they will encounter IT department,but then you can fill the tax for them.(Condition:They must have enough income to show that from where they got this money..)

BTW without a PAN card how will you get your online income in your bank account,as much I remember for any transaction higher than 50,000 the PAN card number is mandatory.And how will you make any heavy transaction?

Thankss a lott.

You just wrote exactly what i did !! :D :D

btw i got my car :) on cash
 
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Income Tax problem when buying car on cash payment

Hi All,

I am working in an MNC in gurgaon and want to buy a car on cash payment (6.25 Lakh). some is my own earned money and rest i am taking from my father.
Just want to know
1. what would be the problem from income tax in such situation.
2. what my father have to show when he is giving money a gift or a Loan?

Thank you in advance.
 
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Forget to ask
3. how much i can pay cash and how much by cheque? or full cheque?

3. who much in cash and how much in cheque?
 
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Re: Income Tax problem when buying car on cash payment

Hi All,

I am working in an MNC in gurgaon and want to buy a car on cash payment (6.25 Lakh). some is my own earned money and rest i am taking from my father.
Just want to know
1. what would be the problem from income tax in such situation.
2. what my father have to show when he is giving money a gift or a Loan?

Thank you in advance.
Why do you want to pay Cash when you can make payment by cheque and stay in peace, as u are working in MNC getting a loan would not be a problem for you.If you pay in cash there could be chances of inquiry regarding source of such CASH.

If your father is lending you money it would be good if he shows as gift to you...
I [thinking] theres some deduction on gift received.
 
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Hi
We are purchasing a car dezire on my mom name who will pay 6.5 lacs by cheque , no loan.
I will give her 1.5 lac by cheque alongwith my brother. Will there be a problem ?
 

TSIVipul

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Hi All,

I am working in an MNC in gurgaon and want to buy a car on cash payment (6.25 Lakh). some is my own earned money and rest i am taking from my father.
Just want to know
1. what would be the problem from income tax in such situation.

2. what my father have to show when he is giving money a gift or a Loan?

3. how much i can pay cash and how much by cheque? or full cheque?
Here are my answers:-
1):Problem from income is actually 'no problem'.How?
Have a look at the income your CA has shown and then see the price of the car.
Now if your annual income in your form 16 or as shown by CA on which you have paid the tax is more than the price of the car then go and get the car for cash.Else get a small loan on the car and pay it back within an year.

2):He must show it a gift.If he shows it a loan then there will be many more legal formalities which will disturb you people.
But take care that he himself is paying income tax on how much income else this gift can gift him some issues.Rest you can take gifts from some more people.
Simple way of converting black money to white is:
Give people money in cash and take back cheques of the same amount from them.This way you can take a good amount from all of them and even better will be if they all pay you not more than 50k(ie:Cheques of 49k).
BTW,don't your mother have a PAN card?
If yes,then maybe she is filling income tax too and if not then take a lac from her as a gift.

3):Since all your money will be white and you would have taken gifts and ll so no issues whatever way you pay.The thing which goes to income tax department is invoice of the car(or final price you paid for it) not how you paid for it.

I hope now its clear to you...

Hi
We are purchasing a car dezire on my mom name who will pay 6.5 lacs by cheque , no loan.
I will give her 1.5 lac by cheque alongwith my brother. Will there be a problem ?
Hmm,talk to CA first of all and then move ahead.I can give advises but your CA is the person who knows it very well that how much you earn on papers and how much should be ideal purchasing capability for you.
Rest do your mother too pay income tax?
If yes then it will be even better else you people will have to cope up with the issue of c/o thing.
 

TSIVipul

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Yes mom i a govt employee with almost 10 Lac salary
Her salary doesn't matter here.What here matters is on how much income she is filling the tax.
And how much is your net family income and the taxable income.

Take it this way:
If the car costs 6.5 lacs then first of all take a look at the income on which your mother fills tax annually.
Now for example if she fills it on 7 lacs,then she can easily take the car for cash
but if her taxable income is about 5 lacs then its not advisable for her to take any car above 4.5-5 lacs for cash.
Hence I am asking you to talk to CA first and then move ahead.

Now comes case 2:-
You people fill tax as a HUF(Hindu Unified family) where every person has a PAN card and out of whole business income of the family it is shown distributed in all,then the tax is imposed on every person and helps a lot in saving the tax,nearly all businessmen take this way(we too).
Now if your mother's taxable income is 5 lacs,then other family members who are not filling tax can pay her upto 50k-1 lac(over that will brign them under the microscope)and who fill the tax can give her upto their permissible taxable income.

Now comes case 3:-
No HUF and every person fills tax independently.In this case the money must revolve in form of gifts.
Like if you give 1.5 lacs to your mother then it must be a gift,else you will be trapped(if your taxable income is below 1.5 lacs).

Disclaimer:I am a young boy with finance field as my interest but I am no finance expert(I am an engg. student)and hence recommend anyone to run to his/her CA/Advocate before proceeding.
 
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arey she is govt employee yaar she has pay tax on all incomes unlike business men
me and my bro have salary of around 5 lac each
 
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