Definition
Tax Collected at Source (TCS)
Tax Collected at Source is tax that a seller or remitter collects from the buyer at the time of certain transactions, such as foreign remittances, creditable against the payer's tax.
TCS is collected by a seller or authorised dealer from the buyer/remitter on specified transactions and deposited with the government. A common example for individuals is TCS on foreign remittances under LRS above thresholds, and on overseas tour packages.
The TCS collected is not an extra tax — it is credited against your total income-tax liability and can be claimed as a refund if excess. It appears in your Form 26AS / AIS.
For those investing abroad in US stocks or travelling overseas, understanding TCS helps plan cash flow, since it is collected upfront even though it is adjustable later.
Related terms
- US Stocks from India (LRS)Indian residents can invest in US and other foreign stocks by remitting money abroad under the RBI's Liberalised Remittance Scheme, subject to its annual limit and tax rules.
- Advance Tax for FreelancersAdvance tax is income tax paid in instalments through the year rather than as a lump sum at filing; freelancers must pay it once their annual tax liability crosses a threshold.
- Liberalised Remittance Scheme (LRS)The Liberalised Remittance Scheme is an RBI facility allowing resident individuals to remit money abroad up to an annual limit for permitted current and capital account transactions.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.