TCS (Tax Collected at Source) is income tax collected by the seller at the point of sale and deposited with the government on the buyer’s behalf. For investors, TCS is most relevant on foreign remittances under LRS.
Current rates (FY 2025-26): 20% TCS on LRS remittances above ₹10 lakh per financial year for investment purposes (equities, ETFs, real estate abroad). 5% TCS on overseas tour packages above ₹7 lakh. Education and medical remittances funded by education loans — 0.5% TCS above ₹7 lakh.
INR example: You remit ₹25 lakh to a US brokerage to buy Apple stock. TCS = 20% × (₹25L − ₹10L) = ₹3 lakh withheld by the bank. You can claim this as a credit in your ITR (Form 26AS) against your final tax liability.
When to use: Always factor TCS into the upfront cash flow for offshore investing — it does not vanish, but it locks up capital until ITR refund. Use Form 27Q for remittance documentation.
SEBI/Tax note: TCS is collected under Section 206C(1G) of the Income-tax Act. It is not a final tax — it is adjustable against your assessed tax.