TCS on Car Purchase Above Rs 10 Lakh Under 206C: Guide 2026

You finalise a ₹14 lakh car and the invoice shows an extra ₹14,000 line marked “TCS @ 1%”. You did not agree to any surcharge, the dealer calls it “compulsory tax”, and you wonder if you just lost that money. You have not. That ₹14,000 is Tax Collected at Source under section 206C(1F) of the Income Tax Act 1961. It sits to your credit with the government, and you get it back (or set it off against your tax) when you file your return. This guide explains what it is and how to recover it.

TCS (Tax Collected at Source) is an advance-tax mechanism. The seller collects a small percentage from the buyer at the time of sale and deposits it against the buyer's PAN. It is a prepayment of your own income tax, parked with the department, fully creditable. It is regime-independent, so it applies whether you file under the old or new tax regime.

Section 206C(1F) of the Income Tax Act, 1961 requires the seller of a motor vehicle to collect tax at source @ 1% where the sale consideration exceeds ₹10 lakh.

Key points settled in law:

• Threshold 🚗 TCS triggers only when the vehicle value exceeds ₹10 lakh. A ₹9.99 lakh car attracts nothing.
• Base 💯 The 1% is charged on the entire sale consideration once it crosses ₹10 lakh, not merely on the excess over ₹10 lakh.
• New and used: it applies to both new and second-hand vehicles sold by a dealer, where value exceeds the threshold.
• Not a final tax: under section 206C(4), the credit for TCS is given to the buyer, so it is adjustable against total tax liability and refundable if excess.
• No-PAN penalty: if you fail to furnish PAN to the dealer, section 206CC allows collection at a higher rate, and that higher collection may be hard to recover, so always give a correct PAN.

Note on luxury goods (recent change): The Finance (No. 2) Act, 2024 extended 206C(1F)-style TCS to other notified high-value goods exceeding ₹10 lakh, with the enabling law worded effective 1 January 2025. The actual list (wrist watches, art and antiques, handbags, footwear, home-theatre systems, yachts and helicopters, racing horses and similar) was notified by CBDT Notification No. 36/2025 dated 22 April 2025, and TCS on those goods operates from that notification date. For a car, the rule has long been settled, so do not let any “new luxury TCS” confusion delay your refund claim.

1. ① Get the proof. Ask the dealer for the invoice clearly showing the 1% TCS and, ideally, the TCS certificate (Form 27D).
2. ② Check Form 26AS / AIS. Log in to the income-tax portal and open Form 26AS and your AIS. The ₹X collected should appear under “Details of Tax Collected at Source” against your PAN.
3. ③ Reconcile mismatches. If the entry is missing or wrong, do not file blindly. Raise the issue with the dealer and, if needed, dispute the AIS entry. See our guide on how to dispute an AIS mismatch.
4. ④ Pick the right ITR form. Choose the form that matches your income sources. Use our which ITR form to file for 2026-27 guide.
5. ⑤ Enter the TCS. In the ITR's “Taxes Paid” section, under “Tax Collected at Source”, the figure auto-populates from 26AS. Confirm it.
6. ⑥ Let the system net it off. The utility offsets your TCS against your computed tax. If prepaid taxes exceed your liability, the surplus becomes your refund.
7. ⑦ Pre-validate your bank account, e-verify, done. Refunds typically credit in 4 to 5 weeks after e-verification. The single most common failure is an un-validated bank account, so fix that first.

• Car purchase invoice showing the TCS line
• TCS certificate (Form 27D) from the dealer, if issued
• Your PAN (must match the one given to the dealer)
• Form 26AS and AIS download from the portal
• Pre-validated bank account for the refund

• Thinking TCS is lost money. It is a credit under section 206C(4), not a charge.
• Not giving PAN to the dealer. Triggers higher collection under section 206CC and breaks the 26AS credit trail.
• Filing before checking 26AS/AIS. If TCS is not reflected, your credit can be denied.
• Assuming 1% applies only to the bit above ₹10 lakh. It is charged on the whole consideration once the threshold is crossed.
• Ignoring the refund because “it is only a few thousand”. On a ₹40 lakh car the TCS is ₹40,000, which is real money you are owed.

Car TCS works on the same principle as TCS on foreign remittances under LRS: both are creditable and refundable in your ITR. If you also send money abroad, see our companion guide on claiming TCS refund on LRS foreign remittance. To check a vehicle before buying, use vehicle owner details by number.

If your TCS credit is not reflecting and the dealer is unresponsive, you can ask the Income Tax Department, through a grievance and, where a public authority is involved, an RTI, to confirm the deposit. You can prepare a request with our AI RTI Drafter. For a deeper grounding in your information rights, see The RTI Playbook.

No. It is a prepayment of your own income tax, collected by the dealer and credited to your PAN. You adjust it against your tax liability or claim it as a refund in your ITR.

No. Section 206C(1F) triggers only when the value exceeds ₹10 lakh. At exactly ₹10 lakh, no TCS is collected.

No. Once the sale consideration crosses ₹10 lakh, the 1% applies to the full consideration, not just the portion over the threshold.

No. TCS is regime-independent. Whether you file under the old or new regime, the TCS credit is given against your computed tax liability for AY 2026-27.

Under section 206CC, tax can be collected at a higher rate when PAN is not furnished, and the credit trail in Form 26AS may break. Always provide a correct PAN.

After you e-verify your ITR, refunds are typically credited in about 4 to 5 weeks, provided your bank account is pre-validated on the portal.

• Income Tax Act 1961, Section 206C(1F) and 206C(4) on incometax.gov.in
• CBDT Notification No. 36/2025 dated 22 April 2025 (notified luxury goods under 206C(1F))
• Finance (No. 2) Act, 2024 extension of 206C(1F) to high-value goods
• Section 206CC, Income Tax Act 1961 on higher collection where PAN not furnished

• TCS on LRS foreign remittance refund in ITR
• Dispute an AIS mismatch
• Which ITR form to file for 2026-27
• Vehicle owner details by number
• AI RTI Drafter