TCS (Tax Collected at Source): Definition, Meaning & Guide for Indian Businesses

TCS is income tax that the seller collects from the buyer at the time of sale and deposits with the government.

What is TCS (Tax Collected at Source)?

Tax Collected at Source (TCS) is similar to TDS but works in the opposite direction. Instead of the payer deducting, the seller collects an additional amount from the buyer and deposits it with the government. Common cases include sale of scrap, tendu leaves, minerals, motor vehicles above ₹10 lakh, overseas tour packages, and remittances above ₹7 lakh under LRS. TCS rates are usually small (0.1% to 5%). The buyer can claim the TCS as a credit against their income tax liability. E-commerce operators collect TCS at 1% (now 0.1% after Oct 2024) on sales by sellers on their platform under Section 52 of CGST Act.