When you buy a car, you may see “TCS” mentioned on the invoice. TCS means tax collected at source. It is an amount the seller collects from you at the time of purchase and then deposits with the government. Think of it as a tax payment made upfront, linked to your PAN.
TCS applies when the car value crosses Rs. 10 lakh. In such cases, the seller collects 1% of the purchase price as TCS. Since a car purchase includes several costs, planning your full budget in advance always helps. If you are financing the purchase through a car loan, checking your options early can make the process smoother.
You may also Check your pre-approved new car loan offer to understand whether you already qualify before you shortlist a model.
What is TCS?
TCS is collected under Section 206C of the Income Tax Act. The main idea is to create a record of high-value purchases and reduce tax evasion. Since the seller collects this tax and reports it against the buyer’s PAN, it becomes traceable in the tax system.
After the seller deposits the TCS, the amount reflects in the buyer’s Form 26AS statement. This helps you confirm that the tax collected from you has been deposited correctly and credited against your PAN.
What is the process of filling TCS?
The seller who collects TCS must deposit it with the government within the required timeline. This is generally done using Challan 281 before the end of the month in which the tax was collected. If the seller does not deposit the amount on time, interest may be charged for non-compliance.
If the seller is a government entity, the tax may need to be deposited on the same day it is collected. Once the TCS is collected and deposited, the seller must issue a TCS certificate to the buyer. Form 27D is used as the TCS certificate, and it includes details such as buyer and seller information, the amount collected, and the date of collection.
How to claim a TCS return?
You can claim the benefit of TCS if it was collected during your car purchase and the car’s price is more than Rs. 10 lakh. You can claim this amount while filing your income tax return, as long as the TCS appears against your PAN.
To do this smoothly, keep your car purchase invoice that shows the TCS amount. Also check your Form 26AS to confirm the TCS has been deposited by the seller. Once it is visible, you can claim the TCS amount under the relevant head in your ITR.
If you are planning your purchase budget along with the tax and on-road costs, it also helps to know your borrowing range first. Check your new car loan eligibility and find out how much you can borrow. Doing this early can help you choose a car that fits your monthly plan.
