When you buy a car worth more than ten lakh rupees, your attention is usually on the insurance, RTO process, and accessories. But there’s another part most people skip.Form 27D, a certificate that proves the tax collected at source (TCS) on your purchase has been deposited under your PAN. It’s not a random bit of paperwork but proof that your money has officially reached the government.
Let’s discover what it means and why it matters for every car buyer.
What is Form 27D?
Form 27D is an Income Tax certificate for TCS (Tax Collected at Source). Whenever a seller collects tax from you under Section 206C of the Income Tax Act, for instance, on a high-value car, they must issue this certificate to confirm that the amount was collected and deposited correctly.
It acts as a receipt from the government showing:
- How much tax was collected from you
- The rate at which it was collected
- The date and amount deposited
- Your PAN and the seller’s TAN details.
This certificate lets you claim the TCS amount as credit when you file your Income Tax Return (ITR). Without it, there’s no record linking the tax you paid to your PAN, which can block your refund or create a mismatch later.
TCS on Car Purchase Above ₹10 Lakh
TCS applies automatically when you buy a new car priced above ₹10 lakh. Under Section 206C(1F), the dealer must collect 1% of the sale price as TCS and deposit it with the government on your behalf.
So, if your car costs ₹15 lakh, the dealer collects ₹15,000 as TCS. That amount goes to the government, tagged to your PAN, and the dealer must issue Form 27D confirming the transaction.
This TCS entry also appears in your Form 26AS or Annual Information Statement (AIS) on the Income Tax portal. When you file your return, this amount gets adjusted against your total tax liability or refunded if you owe nothing.
For a detailed breakdown of how TCS works (including rate tables, due-dates and how it applies to motor vehicles), check out this guide on TCS from ClearTax: Tax Collected at Source (TCS) – Rates, Payment and Exemption.
Why Form 27D Matters?
- Proof of Tax Credit: Form 27D is the only official proof that the TCS deducted by the seller has been deposited in your name. Without it, there’s no way to verify the transaction if your Form 26AS doesn’t show the entry.
- Protects You from Dealer Mistakes: Dealers manage hundreds of transactions daily, and a small error in PAN or filing can cause big trouble. If they forget to issue or upload your details properly, the TCS credit won’t appear in your record. Having the certificate keeps you protected.
- Builds Credibility in Future Transactions: If you plan to resell or exchange your car, proper TCS documentation builds trust. It shows the purchase followed legal compliance and taxation norms.
- Helps You Get Your Refund: That 1% TCS is not an extra cost. It’s a prepaid tax in your name. When you file your return, you can adjust it against your total tax or get it refunded. Without Form 27D, that money stays stuck.
What Form 27D Includes?
The certificate typically shows:
- Seller’s name, address, and TAN number
- Buyer’s name, address, and PAN
- Description of goods or transaction (motor vehicle)
- Date and invoice number
- Total value of sale
- Rate and amount of TCS collected
- Date of deposit with the government
Double-check these details when you receive the form. Even a small mismatch, especially in your PAN, can stop your credit from reflecting in Form 26AS.
When and How to Get Form 27D?
The seller or dealer must issue Form 27D within 15 days from the due date of filing their quarterly TCS return (Form 27EQ).
Typical timelines are:
- For April -June: by 30 July
- For July – September: by 30 October
- For October – December: by 30 January
- For January – March: by 30 May
Most dealers now generate it digitally through the government’s TRACES portal, ensuring authenticity. You can ask for a physical or soft copy; both are valid.
If you don’t receive it by the deadline, remind your dealer. Non-issuance attracts penalties under the Income Tax Act.
How to Use Form 27D When Filing Taxes?
When you log into the Income Tax portal to file your ITR, the TCS entry from Form 27D will already appear in your Form 26AS or AIS.
All you need to do is verify the amount and include it in the Taxes Paid section of your return. If your total tax liability is less than the TCS credited, the balance gets refunded automatically.
So, in effect, that 1% you paid while buying your car comes back to you, provided you keep this certificate safe and claim it properly.
Common Mistakes to Avoid
- Ignoring the Form – Many car buyers assume TCS is a dealer’s charge. It isn’t. Always ask for Form 27D once payment is made.
- Wrong PAN or Name – Ensure your PAN and spelling are correct on both the invoice and TCS record. A single wrong letter can block your credit.
- Not Checking Form 26AS – After your purchase, log in to the tax portal and confirm the TCS entry. It should reflect under your PAN within a few weeks.
- Not Claiming the Refund – If you fall below the taxable income bracket, the TCS is refundable. Don’t skip filing your ITR – it’s how you claim it back.
- Assuming Dealer Compliance is Enough – Even if the dealer says “everything’s uploaded,” don’t take it on faith. Request the actual Form 27D as proof.
For Businesses and Fleet Owners
If you buy vehicles in your company’s name, TCS and Form 27D still apply. The credit will appear under the company’s PAN and can be adjusted during return filing. Keep all such certificates organized auditors often check them to verify asset purchases and tax credits.
Also read: What is Green Tax for Cars? Meaning, Importance & How to Pay?
Conclusion
Form 27D may look like a routine tax certificate, but it’s the bridge between what you pay and what the government records under your name. It ensures your money doesn’t vanish into the system without credit, saves you from compliance errors, and strengthens your financial documentation.
So, the next time you buy a car above ₹10 lakh, don’t just focus on the model or the deal. Ask your dealer one clear question: “When will I get my Form 27D?” Because that’s how you make sure every rupee you pay is recorded, credited, and returned when it should be.
FAQs
1. What is Form 27D used for?
Form 27D is a certificate issued by the seller confirming that Tax Collected at Source (TCS) has been collected and deposited under your PAN. It’s proof that your TCS payment is recorded with the Income Tax Department.
2. How to claim 27D deduction?
You can’t claim it as a deduction but as a tax credit. When filing your ITR, include the TCS amount from Form 27D under “Taxes Paid.” It reduces your total tax liability or gets refunded if you owe nothing.
3. What is TCS as per Form 27D?
TCS means Tax Collected at Source, a small percentage collected by the seller on certain transactions like buying a car above ₹10 lakh. Form 27D certifies that this tax has been collected and deposited.
4. What is Section 27 of Income Tax?
Section 27 defines “deemed ownership” of house property. It applies when a person is treated as the owner for tax purposes, even if they’re not the legal owner.
5. How to avoid 20% TCS?
Provide your correct PAN and file ITR on time. The 20% rate applies if PAN or tax compliance is missing. Always verify details before completing high-value transactions.
