Buying a car above Rs 10 lakh? Here's how TCS works and how to claim it while filing your ITR

TCS rules while buying a new car

For many Indians, buying a car often the second-most expensive purchase after a house, comes with excitement, planning and, increasingly, a tax component that many overlook: TCS or Tax Collected at Source.

Under income tax rules, when you buy a motor vehicle worth more than Rs 10 lakh, the seller is required to collect TCS at 1% of the sales value from you and deposit it with the government.

Yet, many taxpayers either don’t notice the deduction or forget to claim the credit later while filing their income tax returns. This often leads to confusion, unnecessary tax payments, or missed refunds.

Where does TCS get deducted and how do you verify it?

“When purchasing a car for more than Rs10 lakh, the seller collects TCS on the purchase. To check if it was done, simply log into the Income Tax Portal and download Form 26AS. Navigate to the ‘e-File’ tab, select the relevant assessment year, and see if TCS has been mentioned. If yes, don’t worry, this amount will be adjusted against your total tax liability while filing. In case the total tax paid (TDS + TCS) is more than the owed amount, a refund will be issued,” says Sujit Bangar, Founder, TaxBuddy.

Form 26AS is a consolidated annual tax statement that records every tax-related transaction linked to your PAN, including TDS (Tax Deducted at Source), TCS, self-assessment tax, refunds issued, and high-value transactions. If the dealership has correctly deposited the TCS, it will appear here automatically.

This digital trail ensures that even if you misplace the invoice or forget the deduction, the Income Tax Department already has it recorded under your name.

How to claim the TCS while filing ITR

Once you confirm the TCS entry in Form 26AS, claiming it is simple. When you file your income tax return, the TCS amount gets automatically populated in the tax paid section in most ITR utility tools, including on the Income Tax Portal. You only need to verify that the numbers match your 26AS.

If your total tax liability is less than the sum of TDS and TCS paid during the year, the system will automatically compute a refund. If your liability is higher, the TCS credit simply reduces the amount you need to pay.

How to check other TCS collected during the year

Car purchases aren’t the only transactions where TCS applies. Payments for foreign remittance under the Liberalised Remittance Scheme (LRS), foreign tour packages, and certain business transactions can also attract TCS.

Bangar explains, “You can access every TDS and TCS entry in Form 26AS. You can access this while logged in to the Income Tax Portal. It shows every single deduction or collection. You can find 26AS up to AY 2009–10 on the tax portal as of today.”

This means any TCS whether from a car dealership, a travel company or a bank processing overseas remittances will reflect in the same place. As TCS becomes increasingly common in financial transactions, understanding how to track and claim it is now an essential part of personal tax planning.