TCS Under ITA 2025 explained: this guide covers what TCS Under ITA 2025 means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Tax Collected at Source (TCS) is a mechanism where the seller collects tax from the buyer at the time of sale and deposits it with the government. Unlike TDS (deducted by payer), TCS is collected by the payee (seller). The Income Tax Act 2025 maintains and updates TCS provisions primarily under Section 206C and related sections.
Key TCS Rates Under ITA 2025
| Nature of Transaction | Rate | Threshold |
|---|---|---|
| Sale of alcoholic liquor for human consumption | 1% | No threshold |
| Sale of tendu leaves | 5% | No threshold |
| Sale of timber from forest lease | 2.5% | No threshold |
| Sale of any other forest produce | 2.5% | No threshold |
| Sale of scrap | 1% | No threshold |
| Sale of minerals (coal, lignite, iron ore) | 1% | No threshold |
| Sale of motor vehicle above Rs. 10 lakh | 1% | Rs. 10 lakh per vehicle |
| Sale of goods abroad (exports) — 206C(1H) | 0.1% | Turnover >Rs.10Cr; buyer purchases >Rs.50L |
| Foreign remittance under LRS (206C(1G)) | 20% | Rs. 7 lakh (non-edu/medical) |
| Overseas tour package | 20% | No threshold |
| Receipt from foreign company for specified services | 5% | — |
206C(1H) — TCS on Sale of Goods
Sellers with turnover >Rs.10 crore in preceding year must collect TCS @ 0.1% from buyers who purchase goods worth >Rs.50 lakh from the seller in a year. This was introduced to widen the tax base for large B2B transactions.
TCS on LRS and Overseas Travel
From 1 October 2023, Authorised Dealers (banks) must collect TCS on:
- LRS remittances >Rs.7 lakh/year for purposes other than education/medical: 20%
- Overseas tour packages: 20% (no threshold)
- Education (self-funded): 5% above Rs.7 lakh; education loan funded: 0.5%
TCS Deposit and Return
- TCS deposited by 7th of next month (government: same day)
- Quarterly TCS return filed in Form 27EQ
- TCS certificate: Form 27D issued to buyer within 15 days of quarter end
Credit of TCS
TCS collected from a buyer is creditable against the buyer's tax liability. It appears in Form 26AS and AIS. If TCS exceeds tax liability, refund is available after ITR filing.
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