While buying a car, you might encounter a term called "TCS" on the invoice. This stands for tax collected at source, and it is essentially an advance tax payment deducted by the seller at the time of purchase. TCS is applicable on the sale of any car, which is valued at more than Rs. 10 lakh. The amount of TCS that is collected is 1% of the purchase price of the car. TCS is collected by the seller from the buyer, and it is mandatory for the seller to deposit it with the government within 30 days of the sale.
What is TCS?
As per Section 206C of the Income Tax Act, this tax is collected by the seller to track buyers and minimise tax evasion. The TCS amount paid by the buyer will be reflected in their 26AS statement.
What is the process of filling TCS?
The seller who collects the TCS has to deposit the amount in Challan 281 before the end of the month in which the tax was collected. Non-compliance with this requirement leads to a monthly interest charge of 1%. In cases where the seller is a government entity, the tax must be deposited on the very day of collection. When the duty of tax collection falls upon an entity or individual, it is their responsibility to issue a TCS certificate to the buyer. Form 27D serves as the TCS certificate and consists of details such as the name of buyer and seller, tax collected by the seller, date of tax collection and more.
How to claim a TCS return?
You are eligible to claim the benefit if the seller deducted TCS while you purchased the car. The car's ex-showroom price should be more than Rs. 10 lakh. You can claim the benefit of the TCS deducted while filing your income tax return. You will need the car purchase invoice reflecting the TCS amount and your Form 26AS (tax credit statement). This form confirms that the TCS was deposited by the seller against your PAN card. When filing your ITR, you can claim the TCS amount deducted under the relevant head in the ITR form.
