| Aspect | TCS | TDS |
|---|---|---|
| Collection Point | At Sale | At Payment |
| Who Collects | Seller | Payer |
| From Whom | Buyer | Payee |
| Rates | 0.1% to 5% | 1% to 30% |
TCS is not applicable on every sale. It applies only when specific threshold limits are crossed and both buyer and seller meet certain conditions.
| Transaction Type | Threshold | TCS Rate | Applicable On |
|---|---|---|---|
| Sale of Goods (Sec 206C(1H)) | ₹50 lakh per buyer per year | 0.1% | Amount exceeding ₹50 lakh |
| Motor Vehicle Sale | ₹10 lakh per vehicle | 1% | Entire value |
| Scrap Sale | No threshold | 5% | Entire value |
| Foreign Remittance (LRS) | ₹7 lakh | 5% / 20% | Amount exceeding threshold |
TCS applies only if the seller’s turnover exceeded ₹10 crore in the previous financial year (for sale of goods).
TCS stands for Tax Collected at Source, which is similar to TDS but works in reverse. While TDS is deducted by the person making payment, TCS is collected by the person receiving payment on certain transactions. If you're a seller receiving payments for specific goods or services, you need to collect a certain percentage as TCS from your customer and deposit it with the government. TCS applies to transactions like sale of goods exceeding specified limits, sale of scrap, royalties, professional fees in some cases, and more.
For FY 2025-26, common TCS rates include: 0.075% on sale of goods exceeding ₹50 lakh in a year (where turnover of seller exceeds ₹10 crore in previous year), 5% on sale of scrap, 10% on royalties, and 5% on sale of motor vehicle above ₹10 lakh. As a buyer paying money on TCS-applicable transactions, TCS gets added to your payment, but you can claim credit for this TCS when filing your income tax return. This TCS credit reduces your total tax liability.
Our TCS calculator helps both sellers and buyers understand their TCS obligations. If you're a business selling goods or services, you'll see how much TCS you need to collect from customers and how to account for this in your books. If you're a buyer, you'll see how much TCS credit you can claim against your tax liability. TCS affects your overall tax calculation, especially for businesses that deal with large-value transactions. Many businesses need to coordinate TCS with TDS calculation and GST obligations.
TCS compliance involves filing quarterly returns (Form 27EQ) and issuing TCS certificates to buyers. This is separate from your GST filing obligations but needs to be coordinated. TCS rates and thresholds have been changing frequently in recent years, so staying updated is important for businesses. Use our calculator to ensure you're complying with latest TCS rules and not overpaying or underpaying.
For detailed TCS rates, thresholds, and return filing requirements, visit the Income Tax Department's TCS page at TCS rules and rates which explains when TCS applies, rate schedules, and how to claim TCS credit while filing ITR.
TCS impacts both the seller and the buyer, but in different ways. Understanding who collects it and who benefits from it avoids accounting mistakes.
| Party | Responsibility | Tax Impact |
|---|---|---|
| Seller | Collect & deposit TCS | Compliance obligation only |
| Buyer | Pays TCS amount | Gets credit in Form 26AS |
| Government | Receives advance tax | Adjusts against final tax |
TCS is not a cost for the buyer. It is treated as advance tax and can be fully adjusted while filing income tax return.
| Compliance | Form | Due Date |
|---|---|---|
| Deposit of TCS | Challan 281 | 7th of next month |
| Quarterly Return | Form 27EQ | 15 days from quarter end |
| TCS Certificate | Form 27D | Within 15 days of return |
Late deposit or filing attracts interest and penalties, even if the tax amount is small.
TCS compliance errors are common and can lead to penalties even when tax has been paid correctly. Avoid these frequent mistakes.
• Collecting TCS below threshold limits
• Applying wrong TCS rate
• Forgetting turnover condition (₹10 crore)
• Not issuing Form 27D to buyers
• Missing quarterly return deadlines
• Treating TCS as expense instead of advance tax
Using a calculator ensures correct rate, threshold, and compliance every time.
TCS is collected at the time of sale by the seller from the buyer, while TDS is deducted at the time of payment by the payer from the payee. TCS applies to specific transactions, while TDS applies to various payments.
TCS is applicable when the transaction amount exceeds the specified threshold limits for different types of transactions as per Section 206C of the Income Tax Act.
Yes, TCS can be claimed as advance tax payment or refund while filing income tax returns, similar to TDS. The buyer can adjust TCS against their tax liability.
Penalties for TCS non-compliance include interest on delayed payment, penalty for non-deduction, and prosecution in case of willful default. The penalty can be up to ₹1,00,000.
TCS must be deposited within 7 days from the end of the month in which it was collected. It can be deposited online through the Income Tax portal using Form 26G.
Yes, certain transactions are exempt from TCS, including transactions with government entities, transactions below threshold limits, and specific categories of buyers as notified by the government.