TCS On Car Purchase

TCS or Tax Collected at Source is an amount the seller has to get from the buyer on car purchase if the car value is more than 10 lakhs. The TCS is fix at 1% of the total sale value. For example, if someone is buying a Car for Rs 11 Lakh, then he has to pay Rs 11K extra as TCS. Now as a buyer you don't have to do anything.

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The seller that is the car dealer will submit this tax to the government on your behalf and he has to do that in less than 30 days. That means if you have bought a car from dealer X for Rs 11L Lakh, then X will ask you to pay Rs 11 Lakh and 11 Thousand. That 11K he will have to pay to the government. Now if you are not paying any income tax, then you can claim this TCS and the tax will be given to you by the government.

But if you are a Salaried person paying the tax, then they will check the total tax liability of yours and based on that they will refund or offset. For example, if your tax liability is Rs 10K and the TCS collected is Rs 11K, then they will offset it and pay Rs 1K. But if your tax liability is 0, then you will get the whole 11K back. But you have to claim it via Income Tax otherwise they will not refund it.

This is the way for government to track any high value purchase of any individuals and keep track of it. For example, a person not paying any tax and buying a high end vehicle then his/her details will be captured by the government through TCS. The only thing for the salaried people to keep in track is to get refund of your TCS otherwise you have to pay that extra amount to the government. A lot of people don't go for that hassle and just leave that 1% with the government. I would suggest you to keep track of all the tax collected and get a refund where ever possible.

Posted Using INLEO