TCS — Tax Collected at Source

TCS is income tax that a seller collects from a buyer on certain transactions and deposits against the buyer's PAN, where it becomes a tax credit just like TDS.

What it is

TCS is the mirror image of TDS: instead of a payer deducting tax, a seller collects a small slice of tax from the buyer at the point of sale and deposits it with the government. It applies to specific transactions — such as the sale of certain goods above a threshold, foreign remittances under the Liberalised Remittance Scheme (LRS), and the purchase of overseas tour packages. Each collection is reported under the buyer's PAN.

Why it matters

Because TCS is collected against your PAN, it is not an extra cost — it is tax paid in advance that you can claim back. It appears in your Form 26AS and AIS, alongside any TDS. When you prepare your return, TCS reduces what you still owe, and any excess can come back as a refund. Confirming the TCS figures match the portal before you file avoids losing credit for tax already collected.

Example Illustrative

Suppose you remit ₹12,00,000 abroad under LRS and the bank collects TCS on the amount above the applicable threshold, totalling ₹75,000. That ₹75,000 then shows against your PAN in Form 26AS. When you prepare your return, you claim it as a credit against your tax liability, and any excess over your final tax is refundable. Figures are illustrative only.