So you buy a car worth Rs 12 lakh, and 1% TCS is charged on it. That is TCS of Rs 12 thousand. So can you get its refund? Not everyone gets its refund, then who gets it? Under what conditions does it get refunded? And how does it get refunded? Know everything here…
How To Claim TCS Refund On Car Purchase: If you are planning to buy a car this year and you decide to buy a compact SUV which will cost you between 12-14 lakhs. The company will charge all kinds of charges and taxes on it. But you will get back one kind of tax collected by the showroom. The refund amount will be more than 10 thousand. Therefore, do not ignore Tax Collected at Source i.e. TCS. TCS refund is available but with some conditions. What are those conditions, we will explain to you here step-by-step and in simple language. So if you have bought a car, check your receipt and if you are planning to buy one, then read all this.
What is TCS?
First understand that TCS is a kind of tax, which the seller i.e. the car dealer collects from the customer at the time of purchase. But TCS does not have to be paid on every car. If you are buying a car worth less than 10 lakhs (ex-showroom price), then no TCS will be collected from you, but if you buy a car worth more than Rs 10 lakh, then the dealer will deduct 1% TCS from you and deposit it in the government account, which the government returns to you with certain conditions.
Why is TCS taken?
It has become necessary for the government to collect TCS so that transactions of such a large amount can be monitored and tracked. This will also stop tax evasion and the government will also get the tax on time.
How much TCS is charged on a car?
If you buy a car worth more than 10 lakhs at ex-showroom price, then the dealer will add 1% TCS and deposit it to the government under your PAN number. Keep in mind that we are not talking about the on-road price here.
But when 1% TCS is imposed on lakhs of rupees, its effect is that the price of your car increases further, which puts a strain on your budget. But this is not an additional tax. It can be adjusted or refunded while filing ITR.
Not only this, in some cases the rate of TCS can also be 5%, when?:
- If you do not have a PAN
- If you have not filed ITR for the last 2 years
- If your total transactions of last year are more than 50 lakhs
What is the amount of TCS?
Suppose a normal situation in which your car costs Rs 15 lakh: TCS = 1% × ₹15 lakh = Rs 15,000
Now suppose you do not have a PAN and buy a car worth Rs 15 lakh: TCS = 5% × ₹15 lakh = Rs 75,000
Now suppose you are buying a luxury car worth Rs 50 lakh: TCS = 1% × ₹50 lakh = Rs 50,000
Please note that TCS is levied on the total price of the car (ex-showroom), which may also include other taxes or charges. Hence, it becomes important to keep this additional cost in mind before buying a car.
How to claim TCS refund?
TCS refund can be given only to those whose total tax liability is less and TCS amount is more. So if TCS is more than your tax liability then you will get the additional amount as refund.
Suppose your tax liability is zero and TCS is 15 thousand then you will get full refund of TCS. But suppose your tax liability is 10,000 and TCS is 15,000 then you will get a refund of Rs 5,000.
Now if TCS is less than your tax liability then you will not get any refund, but this amount will be adjusted with your total tax liability.
What to do for TCS refund?
1) You will need some important documents for this:
- Invoice of car purchase
- TCS certificate (Form 27D) from the dealer
- And, your PAN card
2) File ITR:
- Choose the correct ITR form based on your income
- Enter TCS details in the “Taxes Paid” section in ITR
3) Claim refund:
- Enter the TCS amount in the “TCS” column in ITR
- The system will automatically calculate your refund
- Verify and submit your ITR
If your refund is eligible, it will be credited to your bank account within a few weeks.
