When You Buy A 20 lakh Rupee Car, Govt Will Give You Rs 20,000 Back: Here's Why

If you are someone who is planning to buy a car in the coming period, then here is an important thing which you should know and keep in mind. We all are aware that when buying a car above Rs 10 lakh, the dealership collects a TCS (Tax Collected at Source) of 1 percent. Now, there are a lot of people who don't know that this money is owed by the government to them, and they forget about it. Now, recently explaining how TCS on car purchases works, a finance influencer has shared a tweet.

Ashish Kumar Meher, an investor and finance influencer, recently shared a post on X. In his post, he highlighted that a lot of people in India are unaware of the fact that after they buy a car above Rs 10 lakh (ex-showroom), they can claim back the 1 percent TCS collected by the dealership. This tax is collected by the dealerships under Section 206C(1F) of the Income Tax Act.

What happens after the tax is collected by the dealership is that most owners forget to collect the Form 27D, which is the certificate of TCS. This particular certificate has to be submitted to the Income Tax Department during the filing of the Income Tax Return. According to law, the dealership has to deposit the TCS to the government, which then has to be claimed by the buyer of the vehicle.

So, if you are a car buyer who has recently bought a car above Rs 10 lakh, then you should collect your TCS certificate so that you can claim back your Rs 10,000 or more, depending upon the ex-showroom price of your car. So, if your car is Rs 20 lakh (ex-showroom), you'll get back your Rs 20,000. It has to be mentioned that this TCS is only collected by the dealership if the price is above Rs 10 lakh.

At the time of the purchase of the car, make sure to ask for the Form 27D. You have to save the invoice, payment receipt, Form 27D, copy of PAN, and purchase documents. Then, when the tax season comes, you have to check your Form 26AS to ensure that the 1 percent TDS was deposited under your PAN or not.

Following which, during the filing of the ITR, if your income is below the taxable limit, you can get a complete refund of your 1 percent TDS. And if, in case, your TCS amount is not reflected in your Form 26AS, you have to contact the dealership and enquire about the 1 percent tax that was collected from you during the time of purchase.

Remember that TCS reclaim is not a discount. It is simply your money which is coming back to you. It is a temporary tax deposit which has to be adjusted against your annual taxable income. It also has to be noted that you will have to be patient as the TCS refund (if income is below taxable limit) takes time to get credited to your account.

Lastly, it has to be mentioned that if you forget to claim back your TCS, it will sit credited under your PAN but will remain unused. So, make sure to remember to confirm the TCS amount is reflected in your PAN.