TaxFinancial Glossary
TCS (Tax Collected at Source)
Definition
Tax collected by the seller at the point of sale for specified goods and services. From October 2023, TCS of 5% applies on foreign remittances above Rs 7 lakh per year under LRS (Liberalised Remittance Scheme) for education, and 20% for other purposes. TCS is a prepaid tax that can be adjusted against your total tax liability.
Why It Matters
TCS on foreign remittances significantly impacts NRIs sending money abroad and parents funding children's overseas education. A Rs 25 lakh education remittance attracts TCS of Rs 90,000 (5% on Rs 18 lakh above the Rs 7 lakh threshold). This is recoverable when you file ITR, but it creates a cash flow impact.