How to Save the 1% TCS Paid During Vehicle Purchase

When purchasing a motor vehicle valued above ₹10 lakhs, the seller is required to collect 1% of the sale consideration as Tax Collected at Source (TCS). This TCS amount is then deposited with the Income Tax Department and is reflected in your Form 26AS.

Understanding TCS

Tax Collected at Source (TCS) is a tax payable by the seller, but the burden is passed on to the buyer. For vehicles, the TCS is applicable when the purchase price exceeds ₹10 lakhs. The TCS collected can be claimed as a tax credit by the buyer at the time of filing their income tax return (ITR).

Steps to Claim TCS Credit in Your ITR

Ensure that the TCS amount paid is reflected in your Form 26AS. This document is accessible through the Income Tax Department's e-filing portal.
While filing your Income Tax Return (ITR), navigate to the section for 'TDS and TCS'.
Enter the details of the TCS amount paid during the vehicle purchase. This will usually be auto-populated from your Form 26AS.
The TCS amount will be added to your total tax paid, reducing your tax liability or increasing your tax refund, depending on your overall tax situation.

Return Home

Example Scenario

For instance, if you purchased a car for ₹15 lakhs, the dealer would have collected ₹15,000 (1% of ₹15 lakhs) as TCS. This ₹15,000 can be claimed as a tax credit when filing your ITR. If your total tax liability was ₹1 lakh, this TCS amount will be deducted, leaving you with a net payable tax of ₹85,000.

Important Notes

Make sure that the TCS amount is correctly reflected in your Form 26AS. If there is any discrepancy, contact the seller or the Income Tax Department for rectification.
TCS can only be claimed as a credit if it is included in your Form 26AS. If it is not reflected, you will not be able to claim it in your ITR.
Keep all the purchase documents, such as the invoice and the TCS certificate, safe as they may be required for verification purposes.

Conclusion

By following the steps outlined above, you can ensure that the 1% TCS paid during your vehicle purchase is properly credited against your tax liability, helping you save on taxes and avoid overpayment.