Is TCS applicable on every car purchase?

No. TCS under Section 206C(1F) applies only when the value of the motor vehicle exceeds Rs 10 lakh. Cars at or below that value do not attract TCS.

Under which section does TCS on cars fall?

TCS on the sale of motor vehicles above Rs 10 lakh is governed by Section 206C(1F) of the Income Tax Act, 1961.

Is the TCS on my car an extra tax that I lose?

No. TCS is not an additional charge. It is tax paid in advance against your PAN. You claim it back as credit when you file your income tax return, and any excess over your tax liability is refunded.

Who collects the TCS - me or the dealer?

The dealer (seller) collects the TCS from you at the time of receiving payment and deposits it with the government against your PAN, then issues you Form 27D as proof.

Is TCS charged on the value including GST?

TCS is computed at 1% of the sale consideration of the vehicle. Dealers typically apply it on the invoice value of the car. Since practice can vary, check exactly what base your dealer has used on the invoice and Form 27D.

Does TCS apply to used or second-hand cars above Rs 10 lakh?

Yes. TCS applies to the sale of motor vehicles whose value exceeds Rs 10 lakh, whether the vehicle is new or used, provided it is sold by a seller covered by the section.

Where can I see the TCS on a car in my tax records?

The TCS appears in your Form 26AS under the Tax Collected at Source section and in your Annual Information Statement (AIS) on the income tax e-filing portal, tagged to your PAN.

How do I claim TCS while filing my ITR?

Verify the TCS in Form 26AS and AIS, then report it in your ITR under the taxes-paid section (Details of Tax Collected at Source). It is often pre-filled. The return then adjusts it against your tax liability.

Which ITR form do I use to claim TCS on a car?

It depends on your income sources, not on the TCS itself. Many salaried individuals use ITR-1 or ITR-2; those with business or professional income use ITR-3 or ITR-4. The TCS credit is entered in whichever form applies to you.

Will I get the full TCS amount back?

Only the portion that exceeds your total tax liability is refunded. The rest is adjusted against the tax you owe. If you have no tax due, the entire TCS comes back as a refund.

How long does the TCS refund take?

After you file and e-verify your return, refunds are usually credited within a few weeks, though they can take up to two to three months depending on processing.

Can salaried employees avoid waiting for a refund?

Yes. Since 1 October 2024, a salaried employee can report TCS such as car TCS to their employer using Form 12BAA, so the employer reduces the TDS on salary accordingly - improving monthly cash flow instead of waiting for a year-end refund.

What if my PAN or name is wrong on the invoice?

A wrong PAN or name can stop the credit from reaching you. Get the dealer to correct the details and re-file, so the TCS is tagged to the right PAN in Form 26AS.

Do I need to do anything at the time of buying the car?

Yes. Give your correct PAN, check it on the invoice, and collect Form 27D from the dealer. Not furnishing PAN can attract a higher rate of TCS.

Tax & ITR

How to Claim TCS Paid on Purchase of a Car: A 2026 Guide

Q: What is the TCS rate on car purchase?

The rate is 1% of the sale consideration of the vehicle, collected by the dealer at the time of sale, where the value exceeds Rs 10 lakh.

Q: Does TCS apply to two-wheelers and commercial vehicles?

Yes. The 1% TCS applies to all motor vehicles above Rs 10 lakh - cars, SUVs, two-wheelers and commercial vehicles - not just passenger cars.

Q: What is Form 27D?

Form 27D is the TCS certificate the dealer issues after collecting and depositing the tax. It records your PAN, the dealer's TAN, the amount collected and the date, and is your proof for claiming the credit.

By CA Neeraj Rohilla, FCAUpdated June 202610 min read

How to claim TCS paid on the purchase of a car in India

In short

Bought a car above Rs 10 lakh? The dealer collected 1% TCS under Section 206C(1F). That money is not an extra cost — it is tax paid in advance against your PAN. You claim it back by checking it in Form 26AS / AIS, then reporting it in your ITR under "tax collected at source"; if it exceeds your tax for the year, the excess is refunded. Salaried buyers can skip the wait by reporting it to their employer via Form 12BAA to reduce salary TDS.

If you recently bought a car worth more than Rs 10 lakh, you probably noticed a line on the invoice labelled "TCS" — an extra 1% the dealer charged. Many buyers assume it is just another fee that disappears into the system. It isn't. TCS is your money, parked with the tax department against your PAN, and you can get every rupee of it adjusted or refunded. Here's exactly how.

What is TCS on a car purchase?

TCS stands for Tax Collected at Source. Under Section 206C(1F) of the Income Tax Act, when a dealer sells a motor vehicle whose value exceeds Rs 10 lakh, the dealer must collect 1% of the sale consideration from the buyer and deposit it with the government. The dealer then issues you a certificate called Form 27D confirming the collection.

The purpose is simple: it lets the tax department keep track of high-value purchases. It is not a separate tax on you. Think of it like advance tax that someone else has paid on your behalf — it sits in your tax account waiting to be set off against what you actually owe.

When does TCS apply?

Value above Rs 10 lakh. The threshold is per vehicle. A car at Rs 9.9 lakh attracts nothing; a car at Rs 10.5 lakh attracts 1% TCS.
All motor vehicles. It is not limited to luxury sedans — SUVs, two-wheelers and commercial vehicles above the threshold are all covered, at the same uniform 1% rate.
New or used. The trigger is the value, not whether the vehicle is brand new.
Retail buyers. The provision targets sales to consumers; sales to vehicle dealers and distributors for resale are treated differently.

One change worth noting: from 1 January 2025, the scope of Section 206C(1F) was widened to also cover certain luxury goods above Rs 10 lakh, not just motor vehicles. For a car buyer, though, the core rule is unchanged — 1% above Rs 10 lakh.

Is TCS an extra cost? No — here's why

This is the single most common misunderstanding. The 1% is prepaid income tax, credited to your PAN. When you file your return, it counts as tax you have already paid for the year. If your total tax liability is lower than everything you have prepaid (salary TDS + this TCS + any advance tax), the difference comes back to you as a refund. If you still owe tax, the TCS simply reduces the balance you have to pay.

How to claim TCS on a car purchase — step by step

Step 1: Collect your Form 27D

Ask the dealer for Form 27D, the TCS certificate. It shows your PAN, the dealer's TAN, the amount collected and the date. If you don't have it, you can request it from the dealer or download it from the TRACES portal.

Step 2: Confirm it in Form 26AS and AIS

Log in to the income tax e-filing portal and open Form 26AS (the consolidated tax statement) and your Annual Information Statement (AIS). The car TCS should appear under the "tax collected at source" details, tagged to your PAN. You can only claim credit for TCS that actually shows here — so check it before filing.

Step 3: File your ITR and report the TCS

Pick the ITR form that matches your income (ITR-1/2 for most salaried individuals, ITR-3/4 if you have business or professional income). In the taxes-paid section, under "Details of Tax Collected at Source", the entry is usually pre-filled from Form 26AS. Verify the amount and the dealer's TAN.

Step 4: Let the return adjust it — and claim any refund

The ITR utility automatically sets the TCS off against your total tax liability. If your prepaid taxes exceed what you owe, the excess becomes refundable. Make sure your bank account is pre-validated and linked to your PAN so the refund lands without delay.

Step 5: E-verify

Your return must be e-verified (Aadhaar OTP, net banking, etc.) for it to be processed. Refunds typically arrive within a few weeks of e-verification, though they can take a couple of months.

A quick worked example

Suppose you buy a car for Rs 14,00,000. The dealer collects 1% = Rs 14,000 as TCS and deposits it against your PAN, then hands you Form 27D. At filing time, that Rs 14,000 is treated as tax you have already paid. If, after counting your salary TDS and this TCS, you have paid more than your final tax for the year, the extra (including this Rs 14,000) is refunded to your bank account. If you still owe tax, the Rs 14,000 reduces what you pay. Either way, you don't lose it.

A faster route for salaried buyers: Form 12BAA

Waiting until you file your ITR to recover the TCS can lock up your money for months. Since 1 October 2024, salaried employees can report non-salary taxes — including car TCS — to their employer using Form 12BAA. The employer then factors it in while deducting TDS on your salary, so less tax is withheld each month. It is the same money, just back in your hands sooner instead of waiting for a refund.

What you'll need

Form 27D from the dealer
Vehicle purchase invoice
Your PAN (correctly recorded by the dealer)
A bank account pre-validated and linked to your PAN

Why TCS refunds get stuck — and how to avoid it

Wrong PAN or name: if the dealer recorded these incorrectly, the credit won't reach you. Check the invoice and Form 27D, and get errors corrected.
Not reflected in Form 26AS: if the dealer hasn't deposited or filed correctly, ask them to re-file with your PAN.
Filing for the wrong year: claim the TCS in the return for the financial year in which the car was purchased.
No PAN given: not furnishing PAN at purchase can attract a higher TCS rate, so always provide it.

The smart move

TCS on a car is one of the easiest tax credits to recover — provided the basics are right: correct PAN, a valid Form 27D, the entry visible in Form 26AS, and the credit claimed in the correct ITR. Get those in order and the 1% comes back to you. Our Saket team handles ITR filing and refunds for individuals and businesses across Delhi NCR — see ITR Advisory, and you can estimate your tax with our income tax calculator.

General information, not tax advice. Rates, thresholds and rules are set by law and can change — confirm the current position for your situation before relying on it.

How Startup Advisory Can Help

Startup Advisory is a CA-led firm in Saket, New Delhi that helps individuals and businesses across Delhi NCR claim back every rupee of TCS and TDS they are owed. TCS on a car, foreign remittance or high-value purchase is fully creditable — we make sure it actually reaches your refund:

ITR filing and tax advisory that correctly claims TCS/TDS credit against your tax liability.
Reconciliation of your Form 26AS and AIS so no credit is missed.
Faster, accurate refunds with the right documentation.
A named CA who handles any mismatch or notice for you.

Call 9311972982 or book a free consultation to claim your TCS credit in full.

Frequently Asked Questions

No. TCS under Section 206C(1F) applies only when the vehicle value exceeds Rs 10 lakh. Cars at or below Rs 10 lakh attract no TCS.

1% of the sale consideration of the vehicle, collected by the dealer at the time of sale, where the value exceeds Rs 10 lakh.

Section 206C(1F) of the Income Tax Act, 1961 governs TCS on the sale of motor vehicles above Rs 10 lakh.

No. It is tax prepaid against your PAN. You claim it as credit in your ITR, and any amount above your tax liability is refunded.

The dealer collects it from you at the time of payment, deposits it against your PAN, and issues Form 27D as proof.

TCS is computed at 1% of the sale consideration; dealers typically apply it on the invoice value. Practice can vary, so check the exact base shown on your invoice and Form 27D.

Yes. The trigger is the value exceeding Rs 10 lakh, whether the vehicle is new or used, when sold by a covered seller.

Yes. The 1% applies to all motor vehicles above Rs 10 lakh - cars, SUVs, two-wheelers and commercial vehicles alike.

It is the TCS certificate the dealer issues after collecting and depositing the tax. It records your PAN, the dealer's TAN, the amount and the date - your proof for claiming credit.

In Form 26AS under the tax-collected-at-source details, and in your Annual Information Statement (AIS) on the e-filing portal, tagged to your PAN.

Verify it in Form 26AS/AIS, then report it in the taxes-paid section of your ITR (Details of Tax Collected at Source) - it is often pre-filled. The return adjusts it against your liability.

Whichever matches your income - ITR-1/2 for most salaried people, ITR-3/4 for business or professional income. The TCS credit is entered in that form.

Only the portion above your tax liability is refunded; the rest is adjusted against tax you owe. If you owe nothing, the entire amount is refunded.

Usually within a few weeks of e-verifying your return, though it can take up to two to three months depending on processing.

Yes. Since 1 October 2024, you can report car TCS to your employer via Form 12BAA so they reduce your salary TDS - recovering the money monthly instead of at year-end.

You can claim only what appears in Form 26AS. If it is missing, ask the dealer to correct and re-file their TCS return with your correct PAN.

A mismatch can block the credit. Get the dealer to correct the details and re-file so the TCS is tagged to the right PAN.

Give your correct PAN, verify it on the invoice, and collect Form 27D. Not furnishing PAN can attract a higher TCS rate.

Yes, where the value exceeds Rs 10 lakh. A business buyer can also claim the TCS as credit against its income tax liability.

Yes - by filing an income tax return in India for the relevant year using the ITR form appropriate to their income and residential status.

About the author: CA Neeraj Rohilla, FCA

Co-Founder & Chartered Accountant, Startup Advisory — Saket, New Delhi

CA Neeraj Rohilla is a Fellow Chartered Accountant (FCA) and a co-founder of Startup Advisory. He leads the firm's work on company registration, Startup India (DPIIT) recognition, income-tax advisory and virtual CFO services for founders across Delhi NCR.

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