Section 206C — Tax Collected
at Source (TCS)
The full Section 206C TCS rate chart for FY 2025-26 (AY 2026-27): LRS foreign remittance, car purchase above ₹10 lakh, scrap and minerals, Form 27D, and how to claim TCS credit or a refund in your ITR.
Section 206C makes the seller/collector collect Tax at Source (TCS) from the buyer and deposit it with the government. Key FY 2025-26 rates: motor vehicle above ₹10 lakh → 1%; LRS foreign remittance (general) above ₹10 lakh → 20%; education/medical remittance → 5% (nil if via an approved education loan); scrap, minerals and liquor → 1%; timber → 2.5%. TCS is not a final tax — it is a credit fully claimable (or refundable) in your ITR via Form 26AS/AIS. Note: TCS on sale of goods u/s 206C(1H) was removed from 1 April 2025.
Section 206C — Complete TCS Rate Chart
Every Section 206C sub-section, the transaction it covers, the TCS rate and the threshold for FY 2025-26. Rates assume the buyer has furnished a valid PAN — under Section 206CC a missing/invalid PAN pushes the rate to the higher of the specified rate, 5%, or twice the rate. Under Section 206CCA, a non-filer of ITR can attract an even higher rate.
| Sub-section | Transaction | TCS rate | Threshold |
|---|---|---|---|
| 206C(1) | Alcoholic liquor for human consumption | 1% | No threshold |
| 206C(1) | Tendu leaves | 5% | No threshold |
| 206C(1) | Timber (under a forest lease) | 2.5% | No threshold |
| 206C(1) | Timber / forest produce (other mode) | 2% | No threshold |
| 206C(1) | Scrap | 1% | No threshold |
| 206C(1) | Minerals — coal, lignite, iron ore | 1% | No threshold |
| 206C(1C) | Parking lot / toll plaza / mining lease | 2% | No threshold |
| 206C(1F) | Motor vehicle (car / SUV) | 1% | Value > ₹10 lakh |
| 206C(1F) | Notified luxury goods (watches, art, etc.) | 1% | Value > ₹10 lakh (w.e.f. 22 Apr 2025) |
| 206C(1G) | LRS remittance — general (invest, gift, etc.) | 20% | Above ₹10 lakh / FY |
| 206C(1G) | LRS — education (self-funded) / medical | 5% | Above ₹10 lakh / FY |
| 206C(1G) | LRS — education via approved loan | Nil | No TCS (from 1 Apr 2025) |
| 206C(1G) | Overseas tour package | 5% / 20% | 5% up to ₹10L, 20% above |
| 206C(1H) | Sale of goods above ₹50L | Removed | Omitted from 1 Apr 2025 |
PAN assumed. New Income-tax Act 2025 (AY 2026-27) re-numbers these clauses but the rates and thresholds continue. Verify at incometax.gov.in.
From 1 April 2025 the Finance Act 2025 removed TCS on sale of goods under Section 206C(1H). Sellers no longer collect 0.1% TCS on receipts above ₹50 lakh. The buyer-side TDS under Section 194Q (0.1% on purchases above ₹50 lakh, for buyers with turnover over ₹10 crore) continues — so goods transactions are now covered by 194Q alone, not by both.
TCS on LRS Overseas Remittance
Under the Liberalised Remittance Scheme, a resident can remit up to USD 2.5 lakh a year abroad. Your bank (the Authorised Dealer) collects TCS on the amount remitted. From 1 April 2025 the threshold rose from ₹7 lakh to ₹10 lakh per financial year (aggregate across purposes), and education funded by an approved loan is now fully exempt from TCS.
| Purpose | TCS rate | Threshold |
|---|---|---|
| Education — via approved education loan | Nil | No TCS |
| Education (self-funded) / medical treatment | 5% | Above ₹10L / FY |
| Overseas tour package | 5% / 20% | 5% to ₹10L, 20% above |
| Overseas investments (shares, property) | 20% | Above ₹10L / FY |
| Gifts / maintenance of relatives abroad | 20% | Above ₹10L / FY |
| Any other LRS purpose | 20% | Above ₹10L / FY |
Threshold is the aggregate LRS remittance in a financial year across all purposes. TCS applies only on the excess over ₹10 lakh (except tour packages, which have their own slab).
The 20% collected on a general LRS remittance feels heavy, but it is only advance tax. It shows in your Form 26AS/AIS and is set off against your total tax in the ITR — any excess is refunded. Salaried remitters can also give the TCS certificate to their employer so it is adjusted against salary TDS.
₹18L overseas investment via LRS
₹15L self-funded education
TCS vs TDS — How They Differ
| Feature | TDS | TCS (206C) |
|---|---|---|
| Who acts | Payer / buyer deducts | Seller / collector collects |
| Trigger | On payment or credit | On receipt from the buyer |
| Sections | 192 to 196 (194*, 195) | 206C |
| Return | 24Q / 26Q / 27Q | Form 27EQ (quarterly) |
| Certificate | Form 16 / 16A | Form 27D |
| Shown in | 26AS / AIS (TDS) | 26AS / AIS (TCS) |
| ITR credit / refund | Yes | Yes |
The collector must deposit TCS by the 7th of the next month, file Form 27EQ each quarter, and issue Form 27D to the buyer within 15 days of the return due date. See our TDS rate chart 2025-26 for the deduction side.
- Buyer furnishes PAN so TCS stays at the normal rate (206CC)
- Collector deposits TCS by the 7th of the following month
- Form 27EQ filed quarterly by the collector
- Form 27D certificate issued to the buyer
- TCS appears in the buyer's Form 26AS / AIS
- Buyer claims the TCS credit while filing the ITR
How to Claim a TCS Refund
TCS is not a final tax. When you file your income-tax return, the TCS in your Form 26AS is treated as tax already paid and set off against your liability. If TCS collected exceeds your total tax, the balance is refunded to your pre-validated, PAN-linked bank account. For a nil or low-income individual, the full LRS TCS can come back as refund.
TCS showing in your Form 26AS or AIS? Get it claimed in your ITR the right way.
File ITR with TaxClue →Section 206C TCS — Frequently Asked Questions
Related TaxClue Services
Next in the TCS & TDS cluster
TCS in your Form 26AS? Get it Back in Your ITR
Whether it is 20% LRS TCS on an overseas remittance, 1% on a car above ₹10 lakh, or collector-side Form 27EQ compliance, TaxClue's CA-led team files your return, claims the TCS credit and secures your refund — 100% online, across India.