Tax Collected at Source (TCS) is an additional amount collected as tax by a seller of specified goods from the buyer at the time of sale over and above the sale price. The seller collects TCS from the buyer on sale so that it can be deposited with the tax authorities. The Indian Income Tax Act has provisions for TCS, and certain persons are required to collect a specified percentage of tax from their buyers on exceptional goods. The tax is intended to be collected while selling items, conducting transactions, receiving a payment in cash from the buyer, or issuing a cheque or draft, whichever method is paid first.

TCS is applicable on all LRS (Liberalized Remittance Scheme) transactions, which permit Rupee loan and gift to a NRI/PIO who is a close relative. An authorized dealer who receives an amount for remittance under the LRS shall be liable to collect TCS on LRS transactions. The TCS charging grid for remittances and transactions under LRS is as follows:

• Education where the source of funds is an education loan: 0.5% of the aggregate amount in excess of INR 7 lakhs
• Education (funded by self) and Medical: 5% of the aggregate amount in excess of INR 7 lakhs
• All other purposes under LRS: 5% of the aggregate amount in excess of INR 7 lakhs

If TCS is applicable, the PAN (Permanent Account Number) of the payer will be used in determining TCS applicability.