TCS (Tax Collected at Source)
Tax that a seller collects from the buyer at the time of sale for specified goods or transactions, over and above the sale price, and deposits with the government.
In short
- Collected by the seller from the buyer at the time of sale, over and above the price, then deposited with the government.
- Applies to specific categories: certain goods above value thresholds, foreign remittances under LRS above specified limits, and overseas tour packages, among others.
- Like TDS, it's a credit, not a final cost, reflected in the buyer's Form 26AS and adjusted against their actual tax liability.
TCS works in the mirror direction of TDS: instead of a payer deducting tax before paying, a seller collects an additional amount from the buyer at the time of sale and deposits it with the government. It applies to specific categories, such as sale of certain goods above value thresholds, overseas remittances under the Liberalised Remittance Scheme above specified limits, and overseas tour packages, among others.
Like TDS, the amount collected as TCS isn't a final extra cost: it shows up as a credit in the buyer's Form 26AS and can be claimed against their total tax liability when they file their return. It's most commonly encountered by individuals through large foreign remittances or high-value purchases of specified goods.
Also referred to as: TCS, tax collected at source.
Frequently asked questions
Who pays TCS, the buyer or the seller?
The buyer pays it, as an addition to the sale price; the seller is responsible for collecting it and depositing it with the government.
Can I claim back TCS I've paid?
Yes. It shows up as a credit in your Form 26AS and is adjusted against your total tax liability when you file your return, just like TDS.
Does TCS apply to all foreign remittances?
No, only above specified limits under the Liberalised Remittance Scheme, and the rate and threshold depend on the purpose of the remittance.
Disclaimer
This glossary entry is for general informational purposes only and does not constitute professional tax, legal, or financial advice. Rules and rates change, so consult a qualified Chartered Accountant for advice specific to your situation.