TCS Tax — Section 206C Rates, LRS & Car Purchase Guide

Updated: 3 June 2026

TCS (Tax Collected at Source) under Section 206C is collected by the seller from the buyer at the time of sale of specified goods. Key rates: motor vehicle above ₹10 lakh → 1%; overseas remittance (LRS) for general purposes above ₹7L → 20%; foreign tour packages → 5% (no threshold); education remittance via loan → 0.5%; e-commerce operator payout to sellers → 1%. TCS is fully creditable against your income tax liability in the ITR — it is not a cost, just advance tax collection.

1% TCS on car purchase above ₹10 lakh — collected by dealer, fully creditable in your ITR.

TCS Rate Chart — Section 206C (FY 2025-26)

Nature of Transaction	Section	TCS Rate	Threshold
Motor vehicle (car, SUV)	206C(1F)	1%	Sale value > ₹10 lakh
Scrap	206C(1)	1%	No threshold
Timber (forest lease / other)	206C(1)	2.5% / 2%	No threshold
Minerals (coal, lignite, iron ore)	206C(1)	1%	No threshold
Tendu leaves	206C(1)	5%	No threshold
Alcoholic liquor for human consumption	206C(1)	1%	No threshold
Parking lot / toll plaza / mining & quarrying	206C(1C)	2%	No threshold
E-commerce — seller payments	206C(1H) / 194O	1%	Gross sales > ₹5 lakh
Sale of goods by seller (non-specific categories)	206C(1H)	0.1%	Buyer purchases > ₹50L in FY
Overseas remittance — LRS (general)	206C(1G)	20%	Above ₹7 lakh per FY
Overseas remittance — LRS (education, medical)	206C(1G)	5%	Above ₹7 lakh per FY
Foreign tour package	206C(1G)	5%	No threshold
Education loan remittance abroad	206C(1G)	0.5%	Above ₹7 lakh per FY

TCS on LRS (Liberalized Remittance Scheme) — FY 2025-26

The Liberalized Remittance Scheme allows Indian residents to remit up to USD 2,50,000 per year abroad. TCS applies on LRS remittances above ₹7 lakh per financial year (aggregate across all purposes).

Purpose of Remittance	TCS Rate	Threshold	Notes
Education — via loan from specified institution	0.5%	Above ₹7L per FY	Lowest rate; loan must be from eligible institution
Education — self-funded (no loan)	5%	Above ₹7L per FY	Higher than loan-funded education
Medical treatment abroad	5%	Above ₹7L per FY	Same as self-funded education
Foreign tour package	5%	No threshold	Applies from ₹1; reduced from 20% (Budget 2023)
Overseas investments, gifts, maintenance	20%	Above ₹7L per FY	High rate introduced from Oct 2023
Any other LRS purpose	20%	Above ₹7L per FY	Residual category at highest rate

TDS vs TCS — Key Difference

Feature	TDS	TCS
Who deducts/collects	Payer (buyer, employer)	Seller / collector
When	At time of payment/credit	At time of collection from buyer
Governing section	Section 192–194S	Section 206C
Form for credit	Form 16 / 16A	Form 27D
Reflected in	Form 26AS / AIS	Form 26AS / AIS
Credit claimed in	ITR	ITR
Refundable if excess?	Yes	Yes

Frequently Asked Questions

What is TCS tax and who pays it?

TCS (Tax Collected at Source) is a tax collected by the seller from the buyer at the time of sale of specified goods or services under Section 206C of the Income Tax Act. Unlike TDS (where the payer deducts tax), in TCS the seller/collector adds the TCS amount to the invoice and collects it from the buyer, then deposits it with the government. Common scenarios: a car dealer collects 1% TCS from you when you buy a car above ₹10 lakh; an authorised dealer collects TCS on foreign remittance under LRS; an e-commerce platform collects 1% TCS on seller payouts. The buyer can claim the TCS as credit while filing their ITR.

How to claim TCS credit in ITR?

TCS credit can be claimed in your Income Tax Return just like TDS credit. The TCS amount collected from you will appear in Form 26AS and AIS (Annual Information Statement) under the "TCS" section. When filing ITR, go to the TDS/TCS credit schedule and verify that all TCS entries match Form 26AS. The TCS credit reduces your final tax liability. If TCS exceeds your total tax liability, the excess is refunded to your bank account after ITR processing. Always cross-check Form 26AS before filing — if a seller has not deposited the TCS they collected, it will not appear and you cannot claim credit for it.

TCS on foreign remittance (LRS) in 2025-26?

TCS on LRS (Liberalized Remittance Scheme) remittances applies as follows for FY 2025-26: Overseas remittance for education (via loan from specified institution): 0.5% above ₹7 lakh; Education / medical treatment remittance (self-funded): 5% above ₹7 lakh; Foreign tour packages: 5% on full amount (no threshold); Other LRS purposes (investments, gifts, etc.): 20% above ₹7 lakh. The ₹7 lakh threshold is per financial year across all LRS remittances. The 20% rate on non-education/medical LRS was introduced in Budget 2023 (effective Oct 2023). TCS collected on LRS is fully creditable in your ITR.

TCS on car purchase above ₹10 lakh?

Under Section 206C(1F), a motor vehicle dealer must collect TCS at 1% from the buyer when the sale consideration exceeds ₹10 lakh. This applies to all motor vehicles — cars, SUVs, etc. — sold for more than ₹10 lakh. The TCS is calculated on the full invoice value (not just the amount above ₹10L). For example, if a car costs ₹15 lakh, the dealer collects ₹15,000 as TCS (1% of ₹15L). This TCS will reflect in your Form 26AS and can be claimed as credit in your ITR, reducing your final income tax payable.

Is TCS refundable?

Yes. TCS is a credit against your income tax liability, not a separate final tax. When you file your ITR, the TCS credit is offset against your total tax payable for the year. If total TCS (plus TDS) collected exceeds your tax liability after considering advance tax paid, the excess will be refunded by the Income Tax Department after ITR processing. Refunds are credited directly to the bank account linked with your PAN on the ITR. To ensure refund is processed smoothly, make sure your bank account is pre-validated on the IT portal and your Form 26AS matches the TCS actually collected.

Tcs Tax Near You

Expert CA/CS assistance for tcs tax across India. Click your city for local details.

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