Arthgyaan

Supporting everyone's personal finance journey

Frequently asked questions (FAQs) on Tax Collected at Source (TCS) when you buy a car

This article gives you a list of common questions and their answers on the concept of tax collected at source when you buy a car.

Frequently asked questions (FAQs) on Tax Collected at Source (TCS) when you buy a car


Posted on 26 Nov 2023
Author: Sayan Sircar
4 mins read
📢Get new post notifications on WhatsApp!

This article gives you a list of common questions and their answers on the concept of tax collected at source when you buy a car.

Frequently asked questions (FAQs) on Tax Collected at Source (TCS) when you buy a car

📚 Topics covered:

Please use the Find feature of your browser to look for specific items of interest.

What is Tax Collected at Source (TCS) when purchasing motor vehicles?

TCS is a tax levied on certain goods and services, including the purchase of specific motor vehicles above Rs 10 lakh, wherein the seller collects a specified percentage of the transaction value from the buyer and remits it to the government.

How is the TCS rate determined for buying a motor vehicle?

For motor vehicles valued above Rs 10 lakh, the standard TCS rate is 1%. However, it can vary: under Section 206CCA, if the buyer doesn’t provide a PAN card, the rate can be 20%. Additionally, if the buyer hasn’t filed income tax returns in the previous two financial years, the tax rate can be 5%.

Did you know that we have a private Facebook group which you can join for free and ask your own questions? Please click the button below to join.

Which types of motor vehicles fall under the purview of TCS?

Motor vehicles with four or more wheels, bikes, scooters, and custom vehicles legally fit for road use, with an engine cubic capacity (CC) of 25CC or more, are subject to TCS if their value exceeds Rs 10 lakh. However, high-end cycles above Rs 10 lakh are exempt as TCS applies only to engine-based vehicles.

From whom is TCS collected, and who is responsible for deducting it?

The seller of the motor vehicle collects TCS. The term ‘seller’ includes various entities like government bodies, companies, cooperatives, or individuals with specified income thresholds from business or professional activities.

Are there situations where a higher rate of TCS is applicable?

Yes, a higher TCS rate may apply if the buyer hasn’t filed income tax returns for the preceding two financial years and if the total TCS and Tax Deducted at Source (TDS) amount exceeded Rs 50,000 in each of those two years. This condition necessitates verification of the buyer’s tax compliance status before the sale to avoid default.

How can buyers ensure compliance with TCS regulations when purchasing motor vehicles?

Buyers must ensure sellers provide them with a TCS certificate (Form 27D) within stipulated timelines. Additionally, they should ensure their PAN details are provided and verify the seller’s compliance with TCS regulations to avoid legal complications.

What about TCS on imported vehicles?

TCS applies to vehicles imported from abroad if they meet specified criteria and exceed Rs 10 lakh in value. However, the process for foreign sellers to collect TCS from buyers in India still needs to be defined in the Income-tax Act.

What should the buyer do to get a refund on TCS?

TCS is never refunded but can be adjusted for your total tax liability in the running Financial Year itself by adjusting TCS vs. your Advance Tax liability. In other words, you are not paying an extra tax called TCS when you buy a car.

What should the buyer do if Form 26AS or AIS does not show the TCS for a car purchase?

If the car dealer has filed their return late, say not by the 15th of the next month, the TCS will not show up. Then you, as the buyer, must contact the dealership if the TCS is not reflected after the next month you bought the car.

How to claim TCS refund on car purchase?

If you have advance tax liability due to tax being paid during the year, the TCS is adjusted against that. Otherwise, TCS will be adjusted against your total tax due at the time of filing income tax return. If the TCS exceeds the total tax due, you will get a refund.

What's next? You can join the Arthgyaan WhatsApp community

You can stay updated on our latest content and learn about our webinars. Our community is fully private so that no one, other than the admin, can see your name or number. Also, we will not spam you.

To understand how this article can help you:

If you have a comment or question about this article

The following button will open a form with the link of this page populated for context:

If you liked this article, please leave us a rating

The following button will take you to Trustpilot:

Discover an article from the archives

Worked out case studies for goal-based investing

Previous and next articles:

<p>This article explains the concept of the stock SIP that allows you to buy shares automatically on a regular basis.</p>
Portfolio Construction
What is a stock SIP? Should you have one?

This article explains the concept of the stock SIP that allows you to buy shares automatically on a regular basis.

Published: 22 November 2023

3 MIN READ


<p>The 2015 Series I SGB showcased a notable return on maturity compared to other investment avenues like fixed deposits and certain equity mutual funds.</p>
Gold
The first SGB issued in Nov 2015 has given 128% return in 8 years. Is that good or bad?

The 2015 Series I SGB showcased a notable return on maturity compared to other investment avenues like fixed deposits and certain equity mutual funds.

Published: 26 November 2023

5 MIN READ


Latest articles:

<p>PPF is a great safe and guaranteed investment that can be used for investing enough to pay for a 4-year IIT engineering degree.</p>
Children
How to pay for an IIT Engineering degree with only PPF investment?

PPF is a great safe and guaranteed investment that can be used for investing enough to pay for a 4-year IIT engineering degree.

Published: 25 February 2024

6 MIN READ


<p>We review the new LIC Amritbaal insurance cum investment plan so that parents are aware that the plan is not good for most people. We will also show what to do instead for your kid’s goals.</p>
Insurance Children Review
Why LIC Amritbaal policy is a complete wastage of money: how to invest for your child in the right way

We review the new LIC Amritbaal insurance cum investment plan so that parents are aware that the plan is not good for most people. We will also show what to do instead for your kid’s goals.

Published: 22 February 2024

4 MIN READ


Topics you will like:

Asset Allocation (21) Basics (8) Behaviour (10) Budgeting (12) Calculator (22) Case Study (6) Children (16) Choosing Investments (41) FAQ (11) FIRE (13) Gold (20) Health Insurance (5) House Purchase (25) Insurance (16) International Investing (10) Life Stages (2) Loans (17) Market Movements (16) Mutual Funds (38) NPS (6) NRI (17) News (16) Pension (8) Portfolio Construction (50) Portfolio Review (27) Reader Questions (7) Real Estate (6) Research (5) Retirement (38) Review (15) Risk (6) Safe Withdrawal Rate (5) Set Goals (28) Step by step (15) Tax (49)

Next steps:

1. Email me with any questions.

2. Use our goal-based investing template to prepare a financial plan for yourself
OR
use this quick and fast online calculator to find out the SIP amount and asset allocation for your goals.

Don't forget to share this article on WhatsApp or Twitter or post this to Facebook.

Discuss this post with us via Facebook or get regular bite-sized updates on Twitter.

More posts...

Disclaimer: Content on this site is for educational purpose only and is not financial advice. Nothing on this site should be construed as an offer or recommendation to buy/sell any financial product or service. Please consult a registered investment advisor before making any investments.

This post titled Frequently asked questions (FAQs) on Tax Collected at Source (TCS) when you buy a car first appeared on 26 Nov 2023 at https://arthgyaan.com


We are currently at 367 posts and growing fast. Search this site:
Copyright © 2021-2024 Arthgyaan.com. All rights reserved.