If the Ex-Showroom cost of the car exceeds 10 lacs. Then the showroom charges TCS – tax collected at source to customers. But you can easily claim the amount back while filing the next FY income tax. In this article, we are taking you through all the steps which will help you in claiming the TCS back.
What is Tax Collected at Source
A tax collected at source (TCS) is the tax payable by a seller which he collects from the buyer at the time of sale. Section 206C of the Income-tax act governs the goods on which the seller has to collect tax from the purchasers.
Tax collected at source on cars
Purchase of Motor vehicle exceeding Rs.10 Lakhs : 1% of Ex showroom cost.
TCS Payments and Returns
- The dates for paying TCS to the government are: The seller deposits the TCS amount in Challan 281 within 7 days from the last day of the month in which the tax was collected.
Note: The tax collector is responsible for collecting the tax and depositing the same to the government. If he does not collect the tax or after collecting doesn’t pay it to the government as per above due dates. Then he will be liable to pay interest of 1% per month or a part of the month.
- Every tax collector has to submit quarterly TCS return i.e in Form 27EQ in respect of the tax collected by him in a particular quarter. The interest on delay in payment of TCS to the government should be paid before filing of the return.
Certificate of TCS
- When a tax collector files his quarterly TCS return i.e Form 27EQ, he has to provide a TCS certificate to the purchaser of the goods.
- Form 27D is the certificate issued for TCS returns filed. This certificate contains the following details:
- Name of the Seller and Buyer.
- TAN of the seller i.e who is filing the TCS return quarterly.
- PAN of both seller and buyer.
- Total tax collected by the seller.
- Date of collection.
- The rate of Tax applied.
- This certificate has to be issued within 15 days from the date of filing the TCS quarterly returns.
TCS was meant for tracing the buyers and to minimize tax evasion. There is no blocking of its credit unlikely which is in GST for some specific situations. It was introduced to force buyers to file their return and disclose their income to the IT Authorities. So that IT Authorities can critically examine the buyer’s taxable income from its expenditures (i.e. car in this case) and from its disclosed income.
TCS collected by the seller is in addition to his sale value and the same is separately recorded/shown on the invoice. The additional amount paid by buyer by way of TCS will reflect in his 26AS statement after the seller filed his TCS Return. Buyer can avail its credit from its tax liability payable to the IT Authorities.
- In case the buyer has not any tax liability, then TCS amount will be refunded after filing of Income Tax Return.
- The TCS collected by the buyer is credited against the PAN of the buyer.
- Your tax statement 26AS will show it and you can claim credit for it by deducting it from total tax payable for the year.
If no tax is payable, you get a refund.
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