A 1% Tax Collected at Source (TCS) on car purchases exceeding Rs 10 lakh is not an additional cost but an advance tax payment. Dealers collect this amount and deposit it against the buyer's PAN. This TCS is reflected in the buyer's Form 26AS and AIS. When filing an income tax return, the TCS amount is adjusted against the final tax liability, potentially resulting in a refund if total tax dues are already met.