How to Claim TCS Refund in Income Tax

Tax Collected at Source (TCS) is a mechanism in India where a certain percentage of tax is deducted at the source of payment for specific transactions, such as foreign remittances, purchase of foreign currency, and overseas tour packages. While TCS is a preemptive collection of tax, it can sometimes lead to excess deduction, resulting in taxpayers being eligible for a refund. Claiming a TCS refund involves including the TCS amount in the income tax return and ensuring accurate TCS credits.

Step-by-Step TCS Refund Process

  1. File Income Tax Return: Include the TCS amount in the income tax return. This initiates the refund process.

  2. Verify TCS Credits: Ensure that all TCS amounts are correctly reflected in Form 26AS, a tax credit statement that provides details of taxes paid on behalf of the taxpayer.

  3. Wait for Processing: The Income Tax Department will process the return and determine the refund amount.

  4. Bank Account Details: Provide accurate bank account details in the return to facilitate a seamless refund.

Documentation Required

  • PAN Card (Permanent Account Number)
  • TCS Certificates (Form 27D) from entities that collected TCS
  • Form 26AS
  • Bank statement (for verification of TCS transactions)
  • Income Tax Return (ITR) acknowledgment
  • Proof of investments and deductions (if applicable)
  • Previous year’s tax records (if applicable)
  • Aadhaar Card (for identity verification)

How to Check Refund Status

  • Visit the e-filing portal of the Income Tax Department:
  • Log in using PAN and password
  • Navigate to ‘e-File’ > ‘Income Tax Returns’ > ‘View Filed Returns’
  • Check the status of filed returns, including refund details

Alternatively, check the refund status on the TIN NSDL website:

Dealing with Excess TCS Deduction

  1. Verify TCS Amounts: Ensure that the TCS amounts deducted are correctly reflected in Form 26AS.

  2. File Accurate Returns: Report the correct TCS amounts in the income tax return.

  3. Claim Refund: If the TCS exceeds the tax liability, the excess amount is eligible for a refund. Claim the refund through the income tax return.

Additional Tips

  • Keep track of TCS deducted on various transactions to avoid overpaying.
  • Maintain proper documentation for TCS payments.
  • File income tax returns on time to avoid penalties and delays in refunds.
  • Consult a tax professional for guidance on TCS and refund claims.

Claiming a TCS refund is a straightforward process that involves including the TCS amount in the income tax return, verifying TCS credits, and providing accurate documentation. By following the steps outlined above, taxpayers can ensure that any excess TCS deducted is refunded promptly.

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Can we claim TCS credit in income tax return?

The money deducted as TCS can be adjusted against your overall tax liability. TCS can be claimed as an income tax refund or a credit when filing for returns.

How do I deduct TCS?

As per income tax law,​ the seller shall collect TCS from the buyer at the time of debiting the amount payable to the buyer’s account or at the time of receipt of such amount from the said buyer by any mode, whichever is earlier.

Can TCS be adjusted against TDS?

No, according to Section 206 C (1H) of the Income Tax Act, you cannot collect TCS if a buyer is under the liability to pay TDS.

What is the new TCS rule?

Nature of Payment
TCS Before 30th September 2023
TCS After 1st October 2023
Purchase of Overseas Tour Packages
5%, without any threshold
5% upto a value of Rs.7 lakhs 20% on a value exceeding Rs.7 lakh.

How do I claim a TCS refund?

Claim TCS Refund: In your income tax return, you can claim a refund for the TCS paid. Provide the details of the TCS transaction, including the amount, the seller’s PAN, and the TCS certificate details. 4. Calculate and Verify the Refund: Ensure that you’ve calculated the refund accurately. The refund amount should match the TCS amount you paid.

Can TCS be used as a tax refund?

The money deducted as TCS can be adjusted against your overall tax liability. TCS can be claimed as an income tax refund or a credit when filing for returns.

Is TCS an additional tax?

However, you need not fret about this additional burden as TCS isn’t an additional tax. You can adjust it against your total income tax liability or claim it back while filing income tax returns (ITR). TCS is a tax collected by sellers when certain high-value transactions occur, and a refund may be available in specific circumstances.

Is TCS a tax deductible transaction?

TCS was imposed on these transactions by the Finance Act, 2020. However, individuals can claim credit for the TCS at the time of filing income tax return in a manner similar to TDS or tax deducted at source. Here is a look at the rules regarding applicability of TCS and how much tax is leviable as TCS on the specified transactions.

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