TCS - Tax Collected at Source

Tax Collected at Source (TCS) is tax that a seller or other specified collector adds to the sale price, collects from the buyer at the point of sale, and deposits with the government. In India the term spans two separate regimes: income-tax TCS under Section 394 of the Income-tax Act, 2025 (the old Section 206C of the Income-tax Act, 1961, administered by the CBDT), and GST TCS under Section 52 of the CGST Act, collected by e-commerce operators on taxable supplies made through their platform.

Income-tax TCS (Section 394, the old Section 206C)

The collector quotes its TAN, deposits the tax, files a quarterly return in Form 27EQ and issues a certificate in Form 27D; the buyer claims credit for the amount, which appears in Form 168 (the old Form 26AS) and the Annual Information Statement (AIS). It applies to notified goods such as scrap, timber, minerals, tendu leaves and alcoholic liquor, to motor vehicles above ₹10 lakh under Section 394 (the old Section 206C(1F)), and to foreign remittances and overseas tour packages under the Liberalised Remittance Scheme (Section 394, the old Section 206C(1G)).

Key rates and recent changes

• The LRS foreign-remittance threshold was raised to ₹10 lakh from 1 April 2025: 20% applies above the threshold for most purposes, 5% for self-funded education and medical costs, and nil where foreign education is funded by a Section 129 (the old Section 80E) loan.
• Section 206C(1H) TCS of 0.1% on sale of goods above ₹50 lakh has been made inapplicable from 1 April 2025, removing a long-standing overlap with TDS under Section 194Q.
• GST TCS by e-commerce operators is 0.5% (0.25% CGST + 0.25% SGST, or 0.5% IGST) with effect from 10 July 2024, reported monthly in Form GSTR-8.