Income tax · TDS and TCS
When is TCS collected on foreign remittances, car purchases and sale of goods?
Short answer
From tax year 2026-27, banks collect TCS on remittances under the Liberalised Remittance Scheme above ₹10 lakh a year: 2% for education or medical treatment (nil if paid from an education loan) and 20% for other purposes; overseas tour packages carry a flat 2%. A seller collects 1% on a motor vehicle above ₹10 lakh. TCS on sale of goods was abolished from 1 April 2025; large buyers deduct 0.1% TDS instead. TCS is not an extra tax: claim it in your return.
The main rates for tax year 2026-27
| Transaction | Threshold | TCS |
|---|---|---|
| LRS remittance for education or medical treatment | Above ₹10 lakh a year | 2% (nil if funded by an education loan from a specified institution) |
| LRS remittance for other purposes (investment, gifts, maintenance) | Above ₹10 lakh a year | 20% |
| Overseas tour programme package | No threshold | 2% |
| Motor vehicle | Above ₹10 lakh per vehicle | 1% |
| Scrap, liquor, minerals, forest produce | No threshold | 2% |
The full list is in our rates and tables. The ₹10 lakh LRS threshold is per person, across all banks, for the year. RBI's overall LRS limit is a separate cap on how much you may remit.
Sale of goods
TCS at 0.1% on sale of goods (section 206C(1H)) was omitted from 1 April 2025. Instead, a buyer with turnover above ₹10 crore deducts TDS at 0.1% on purchases from a seller above ₹50 lakh in the year (section 194Q, now section 393(1), serial 8(ii)).
Getting the money back
TCS is credited to your PAN and appears in Form 26AS (Form 168 from tax year 2026-27). You can:
- claim it in your return against your tax, with any excess refunded; or
- if you are salaried, tell your employer about it, so the employer reduces TDS on your salary during the year.
Practical points
- Plan large remittances: splitting a ₹15 lakh remittance between family members, each within ₹10 lakh, is legitimate only if each person genuinely remits their own money.
- Without a PAN, or with an inoperative PAN, TCS is collected at a higher rate.
- Form 15CA and 15CB (now Forms 145 and 146) may also be required for remittances; ask your bank.
Legal basis
- Section 394, Income-tax Act, 2025 (from 1 April 2026), formerly section 206C, Income-tax Act, 1961
- Section 393(1), Table serial 8(ii), Income-tax Act, 2025 (TDS on purchase of goods), formerly section 194Q
Official sources
Related questions
- What are the TDS rates and thresholds for rent, contractors, professionals, interest and commission?For tax year 2026-27, under section 393 of the Income-tax Act, 2025: rent of land or buildings 10% above ₹50,000 a month; contractors 1% (individual...
- How does my employer deduct TDS on salary, and how do I declare my investments?Your employer estimates your income for the whole year under the regime you choose, works out the tax, and deducts it evenly from each month's salary....
- Form 16, Form 26AS and the AIS don't match. Why, and what should I do?Form 16 shows only your employer's view of salary and TDS. Form 26AS shows tax credits from all deductors, and the AIS shows almost every reported...