- Most people are unaware of the benefits related to tax as per the taxation laws.
- In the case of cars costing over Rs 10 lakh, a 1% TCS is levied.
- But you can claim that back if you acquaint yourselves with the taxation laws.
In this post, we shall discuss how one can claim a 1% TCS that he/she paid at the time of the new car purchase. Knowing the intricacies of taxation laws is critical to saving a lot of money that would otherwise go into paying taxes. It must be mentioned here that we are not talking about or promoting tax evasion. Instead, we would like to educate our readers through which they could avail the tax benefits enshrined in the very laws that govern taxation in India. Here are the details.
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1% TCS on New Car Purchase
TCS stands for Tax Collected at Source. It is an amount that the seller charges the buyer depending on the cost of the commodity bought and sold. In the case of vehicles, a 1% TCS has to be paid by the car buyer to the car seller if the total cost of the vehicle comes out to be over Rs 10 lakh. This has been the law since 2016. The other prominent commodities on which this tax is applicable are jewellery, bullion, tendu leaves, etc. Each of these attracts various percentages of TCS depending on the limit set by the authorities.
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After paying the TCS amount for the new car purchase to the dealership as a part of the cost of the vehicle, the seller will issue the TCS certificate to the buyer. Form 27D acts as the TCS certificate. It will have the details like the name of the buyer and seller, TAN of the seller, PAN of the buyer, tax collected by the seller, date of tax collection, and tax rate (i.e. 1% in the case of vehicles). While filing ITR, look for the TCS schedule of the tax return form.
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The details will be auto-filled based on the information provided in Form 27D. Make sure to cross-check the information and make any corrections applicable. The amount of TCS will either be returned back to you if you have no tax liabilities or adjusted against the outstanding tax that you need to pay. Note that this amount can’t be carried over to next year. Hence, you must mention it in the same year as the purchase of the car. We hope this information about the TCS on a new car purchase will help you.