Bought a car over ₹10 lakh? Don't forget to claim back the 1% TCS in your ITR

If you bought a car with an ex-showroom price above ₹10 lakh this year, the dealer would have collected an extra 1% Tax Collected at Source (TCS) on top of the invoice value under Section 206C(1F) of the Income Tax Act. Many buyers treat this as a sunk cost — but it isn’t. That 1% is credited against your PAN and can be claimed back, either as an adjustment against your tax due or as a straight refund, when you file your ITR for AY 2026-27 before the 31 July deadline.

How the adjustment works

• The TCS collected on the car purchase is not an additional tax — it’s a prepayment that sits in your tax account, similar to TDS deducted from salary.
• When you file your return, this amount is added to your total tax credits.
• If your total tax liability for the year is less than the TCS paid, the department refunds the difference straight to your PAN-linked bank account.
• If your liability is higher, the TCS simply reduces the balance tax you owe — you pay only the shortfall.

What to check before filing

1. Form 26AS and AIS: Confirm the TCS amount the dealer deposited shows up correctly against your PAN. Mismatches are one of the most common reasons refunds get delayed or returns get flagged for scrutiny.
2. Form 27D: This is the TCS certificate the dealer/seller issues at the time of sale. Keep it as backup documentation even though the credit itself flows through 26AS.
3. Enter the TCS figure correctly in the tax credit schedule of your ITR form — it needs to be claimed explicitly; it isn’t auto-adjusted just because the dealer reported it.

Why this matters right now

With AY 2026-27 filings running behind last year’s pace and the 31 July deadline approaching, buyers who purchased a high-value car earlier this financial year should reconcile their 26AS now rather than scrambling in the final days. A missed or mismatched TCS entry can either delay a legitimate refund or, worse, leave money on the table if you skip claiming the credit altogether.

Before filing, you can estimate your final tax outgo — and see how much of the TCS credit will come back to you — using the income tax calculator or the old tax regime calculator if you haven’t switched to the new regime.

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Source: BusinessToday — ITR filing 2026: Bought a car above ₹10 lakh? You may be able to claim back the 1% TCS while filing your tax return. Verify credits on the Income Tax e-filing portal.