If you are planning to buy a car or any motor vehicle in India, you may have heard about TCS on vehicle purchase in India. Many buyers get confused seeing extra charges in the invoice.
Let’s understand what TCS is, when it applies, and how it affects your vehicle purchase.
What is TCS?
TCS (Tax Collected at Source) is a tax that the seller collects from the buyer at the time of sale and deposits to the government.
It is governed under Section 206C(1F) of the Income Tax Act, 1961.
When is TCS Applicable on Vehicles?
TCS is applicable when:
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A motor vehicle is sold
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The value of the vehicle exceeds ₹10,00,000
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It applies per vehicle (not cumulative purchase)
This rule applies whether the vehicle is for personal or business use.
TCS Rate on Vehicle Purchase
Currently, the TCS rate is:
1% of the ex-showroom price exceeding ₹10 lakh
Example:
If you buy a car worth ₹15,00,000:
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TCS = 1% of ₹15,00,000
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TCS amount = ₹15,000
This amount is collected by the dealer and deposited with the Income Tax Department.
Does TCS Increase Your Tax?
No.
TCS is not an additional tax burden. It works like advance tax.
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The amount collected appears in your Form 26AS
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You can adjust it while filing your Income Tax Return (ITR)
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If your total tax liability is lower, you can claim a refund
On Which Vehicles is TCS Applicable?
TCS applies to:
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Cars
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SUVs
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Luxury vehicles
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High-value commercial vehicles
TCS does NOT apply to:
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Two-wheelers
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Vehicles costing below ₹10 lakh
Who is Responsible to Collect TCS?
The vehicle dealer or seller is responsible for collecting TCS from the buyer and depositing it to the government.
The buyer must provide PAN details at the time of purchase.
Important Points to Remember
- Applicable only if vehicle value exceeds ₹10 lakh
- Collected at time of sale
- Adjustable during ITR filing
- Mandatory PAN required
- Applies to each vehicle separately
Understanding TCS on vehicle purchase in India helps you avoid confusion while buying a car. It is not an extra tax but a tax collection mechanism that can be adjusted during income tax filing.
Before purchasing a high-value vehicle, always check the invoice carefully and confirm the TCS amount.
Published on February 20, 2026