Car buyers may be eligible for an income tax refund due to 1% TCS (tax collected at source) collected on vehicle purchases exceeding ₹10 lakh. According to reports from Mint, this amount can reduce your tax liability or provide a refund if your tax payable is less than the TCS paid. The TCS is not an additional charge but rather tax paid in advance that can be adjusted against your total tax liability when filing your income tax return.
Car dealers and sellers are required to deduct 1% TCS on motor vehicle sales if the ex-showroom value exceeds ₹10 lakh, as per income tax rules. As reported by Mint, this amount is collected from the buyer at the time of transaction and deposited against their Permanent Account Number (PAN). The TCS applies to retail buyers and is intended to help the tax department track high-value purchases, with the amount not being a permanent expense but rather a tax credit linked to the buyer's PAN.
For example, if you bought a car worth ₹15 lakh and 1% TDS was deducted by the dealer, you may be eligible to receive a tax refund of approximately ₹15,000, according to Mint reports. The TCS should eventually reflect against your PAN, but taxpayers can also check the deduction by looking at their Form 26AS and AIS statements on the income tax e-portal.
Eligible taxpayers can follow these steps to claim their TCS refund: collect Form 27D (TCS certificate) from the car dealer, verify TCS appears in Form 26AS or AIS, calculate total income tax liability for the financial year, and file ITR while correctly claiming the TCS amount. As reported by Mint, once all steps are completed, refund status can be checked under 'View Filed Returns' on the e-filing portal, with eligible refunds credited to pre-validated bank accounts.
