What is tax collected at source (TCS)?
Reviewed by Ranga & Company
TCS: Tax collected at source (TCS) is tax a seller collects from the buyer, over and above the price, on specified sales such as scrap, motor vehicles over ₹10 lakh and foreign remittances, and deposits with the government.
At a glance
- Section
- 206C of the 1961 Act
- Deposit by
- 7th of the next month
- Quarterly return
- Form 27EQ
- Certificate
- Form 27D
- Credit
- Buyer claims it against their tax in the ITR
Common TCS cases
| Transaction | TCS |
|---|---|
| Sale of scrap | 1% |
| Motor vehicle above ₹10 lakh | 1% of the price |
| Foreign remittance under LRS above ₹10 lakh a year | 20% generally; 5% for education or medical purposes |
| Overseas tour packages | Varies by amount |
TCS on the sale of goods under section 206C(1H) was withdrawn from 1 April 2025.
For buyers
TCS is not an extra tax: it shows in your Form 26AS and AIS and is adjusted against your tax when you file, so you get it back as a refund if it is more than your liability.
Common mistakes
- Buyers forgetting to claim TCS paid on a car or foreign remittance in their ITR
- Sellers still collecting TCS on goods under the withdrawn 206C(1H)
Frequently asked questions
Is TCS refundable?
TCS is credited against your income tax when you file your return. If it exceeds your liability, the excess is refunded.
What is the TCS on foreign remittances?
Under the Liberalised Remittance Scheme, TCS generally applies at 20% above ₹10 lakh a year, with lower rates for education and medical treatment.
What is the difference between TDS and TCS?
TDS is deducted by the payer from a payment; TCS is collected by the seller from the buyer on top of the price.
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