Buying a new car remains a dream for many Indians. Salaried employees and business owners often plan carefully to afford premium vehicles. Many buyers opt for EMIs to enjoy better features and enhanced safety.
If you plan to buy a car costing more than ₹10 lakh, a tax rule applies. The government levies a 1 per cent Tax Collected at Source (TCS) on such purchases. Many car buyers remain unaware of this provision.
How Much TCS Do You Pay?
When you buy a car priced above ₹10 lakh, the dealer collects 1 per cent TCS. For a ₹10 lakh car, the TCS amounts to ₹10,000. A ₹30 lakh car attracts ₹30,000 as TCS.
The dealer deposits this amount with the Income Tax Department under your PAN.
Collect Form 27D from the Dealer
Buyers must collect Form 27D at the time of purchase. This form acts as proof of TCS payment. Without it, claiming the amount later becomes difficult.
Experts advise buyers to keep this document safe.
Verify Details in Form 26AS
During income tax filing, buyers should check Form 26AS on the Income Tax Department website. This form shows all tax-related entries, including TDS and TCS.
Confirm that the dealer has correctly reported the TCS amount.
Claim TCS While Filing ITR
While filing your Income Tax Return, enter the TCS amount shown in Form 26AS. You can then claim it for adjustment or refund.
If your total tax liability is lower than the TCS paid, the government refunds the excess amount. If your tax liability is higher, the system adjusts the TCS against payable tax.
Important Tip for Car Buyers
Anyone planning to buy a car above ₹10 lakh should understand this rule. Always collect Form 27D and verify Form 26AS before filing returns.
With proper documentation and timely filing, buyers can easily recover the TCS amount and reduce their financial burden.
