TCS Under Section 206C: Rates for Sale of Goods, LRS & TDS-TCS Credit

When TCS applies (FY 2025-26)

• Sale of goods: seller turnover over Rs. 10 crore previous year - collect 0.1% on the amount exceeding Rs. 50 lakh per buyer
• LRS foreign remittance (206C(1G)): 0.5% above Rs. 7 lakh - travel, gifts, overseas investment - 0.5% education (loan-financed) too
• Overseas tour package: 5% above Rs. 7 lakh (20% without PAN)
• Scrap, minerals, timber, lottery (206C(1)): higher notified rates depend on the commodity

How to handle the 7 lakh LRS threshold

• Track cumulative remittances per PAN in the FY
• The threshold applies to the remittance side (payments for education/medical have separate slabs - check the section)
• Banks remit abroad collect TCS on outward remittance above the limit
• Educational remittances: 0.5% above 7 lakh; medical: 0.5% above 7 lakh

TCS compliance responsibilities

• Collect at the time of receipt, not invoice
• Deposit by the 7th of the following month (or 30th for 1G cases)
• File quarterly statements via Form 27EQ (Q1: by 31 July)
• Issue TCS certificates (12B/12BA/12BH etc.) to buyers
• Record buyer PANs correctly - the 20% no-PAN rate applies otherwise

Impact on individuals

For most individuals the LRS threshold is the only TCS they meet. If your bank collects 0.5% on a Rs. 10 lakh transfer, the credit shows in 26AS only after the bank files 27EQ - reconcile while filing your ITR, or the credit lands in the next assessment cycle.

What you should do

• Aggregate per-PAN remittances before booking foreign transfers
• Give PAN to the bank/seller to avoid the 20% rate
• Reconcile TCS lines in 26AS/AIS before filing ITR
• If TCS was collected twice on the same transaction, ask the collector to file a correction
• Sellers: compute the 10-crore turnover test; don't collect on exempt, exported or inter-state-affected categories