If you have purchased a new car worth Rs 10 lakh or more during the financial year 2025-26 (FY26), then there is good news for you. You can get a tax refund of at least Rs 10,000 or more when filing Income Tax Return (ITR). However, for this you will have to correctly claim 1% TCS (Tax Collected at Source) deducted on car purchase in ITR. Many people forget to claim this tax credit, leaving their money with the government.
What is 1% TCS?
According to income tax rules, if a person buys a new car worth more than Rs 10 lakh, the car dealer has to collect 1% TCS of the entire selling price and deposit it with the government. This is not an additional tax, but a tax deposited in the name of your PAN, which can later be adjusted or withdrawn as a refund while filing ITR. For example, if you have purchased a car worth Rs 10 lakh, then Rs 10,000 TCS will be deducted. Whereas on purchasing a car worth Rs 20 lakh, TCS of Rs 20,000 will be deposited.
How to claim TCS?
Before filing ITR, ensure that the car dealer has deposited TCS against your PAN with the government. For this you can check the entries in Form 26AS and Annual Information Statement (AIS). If TCS information is not visible there, contact your dealer immediately.
While filing ITR, this TCS information will have to be filled in the ‘Taxes Paid’ or ‘TCS Credit’ section. If your total tax liability is less than the TCS deducted, the remaining amount will be credited to your bank account as a refund. If the tax liability is higher, this amount will be adjusted in your tax payment.
Be sure to keep these documents
While claiming TCS, keep some important documents with you. These include car purchase invoice, Form 27D (TCS Certificate), Form 26AS and AIS. With the help of these documents, you can easily prove that TCS has been deposited in your name.
Keep these things in mind
Tax experts say that while filing ITR, not only the income and tax liability but also the tax credit entries like TDS and TCS should be checked carefully. Many times, due to a small mistake or lack of information, refund worth thousands of rupees is missed. Therefore, before filing the return, please match Form 26AS and AIS.
If you bought a car more than Rs 10 lakh in FY26, don’t forget to claim 1% TCS while filing ITR. With this you can get a tax refund of at least Rs 10,000 or more, which will be deposited directly into your bank account.
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