NRI Income Tax & Compliance

TCS Rate Chart For FY 2025-26 (AY 2026-27)

  • April 2, 2026
  • 9 mins
  • 10.8K Views
TCS Rate chart

Tax collected at source (TCS) is an extra tax imposed by the seller of specified goods or services on the buyer. Generally, the TCS is collected in addition to the sale amount and deposited with the Indian tax authorities. 

In this blog, we will explore the latest TCS rate chart applicable to the financial year 2025-26 (AY 2026-27).

Key Takeaways
  • TCS is collected by the seller from the buyer at the time of sale of specific services or goods, as per the Income Tax Act. 
  • The TCS rate on the sale of alcoholic liquor for human consumption is 1%. 
  • Buyers can claim the credit on the TCS tax they have paid by filing their income tax return, which can then be set off against their total tax liability. 
  • If the buyer fails to furnish the PAN card, the TCS rate will be either double the prescribed rate or 5%, whichever is higher. 

What Is TCS?

TCS stands for tax collected at source. Under Section 206C of the Income-tax Act, TCS is a tax collected by sellers from buyers at the time of sale of specified goods and services. TCS is applicable to transactions involving goods such as timber, alcohol, and minerals, as well as certain foreign remittances. 

It is the seller's obligation to collect the TCS from the buyer at the government-prescribed rate and deposit it with the government within the time. However, buyers can claim the credit for the TCS paid while filing their income tax returns. Both buyers and sellers must understand the TCS sections and their applicable TCS rates to ensure everything is in order and to prevent tax evasion. 

What Is The TCS Rate?

TCS rates vary based on the type of service or goods involved, as specified under Section 206C of the Income-tax Act. For example, the TCS rate for the sale of scrap is 1%, while the rate for the sale of minerals such as lignite and coal is also 1%. 

For foreign remittances under the LRS exceeding Rs 7 lakh, the TCS rate is 5% for general transactions and 20% for overseas tour packages. 

The TCS rate ensures that tax collection is proper and compliant, and buyers can claim their TCS credit by filing their income tax returns. 

TCS Rate Chart For FY 2025-26 (Assessment Year 2026-2027)

The following table lists the applicable TCS sections and their corresponding tax collected at source rates for FY 2025-26.

Nature of Payment TCS Rate
Alcoholic liquor 1%
Timber (forest lease) 2%
Timber (non-lease) 2.5%
Other forest produce 2.5%
Scrap 1%
Tendu leaves 5%
Minerals (e.g., coal) 1%
Motor vehicle >Rs 10L 1%
LRS (other) >Rs 10L 20%
LRS (edu/medical) >Rs 10L 5%
Overseas tour package 5%
Sale of goods 0%

Note: The aforementioned list includes most sections applicable to domestic transactions. Furthermore, taxpayers, please ensure that if the PAN is not provided, the TCS rate will be either twice the applicable rate or 5%, whichever is higher, as per the terms. 

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The Bottom Line

In a nutshell, the tax collected at Source (TCS) is an essential mechanism to ensure tax compliance for high-value transactions in India. TCS rates vary by the nature of the goods and services; it is mandatory to check the TCS rate chart to find the correct rate. 

As a taxpayer, when you adhere to the tax provisions, you help the government to improve the overall tax collection process efficiently and prevent tax evasion in one way or the other. 

Note: This guide is for information purposes only. The views expressed in this guide are personal and do not constitute the views of Savetaxs. Savetaxs or the author will not be responsible for any direct or indirect loss incurred by the reader for taking any decision based on the information or the contents. It is advisable to consult either a CA, CS, CPA or a professional tax expert from the Savetaxs team, as they are familiar with the current regulations and help you make accurate decisions and maintain accuracy throughout the whole process.

Pankaj Shaw
Pankaj Shaw(Tax Expert)

Mr Shaw brings 8 years of experience in auditing and taxation. He has a deep understanding of disciplinary regulations and delivers comprehensive auditing services to businesses and individuals. From financial auditing to tax planning, risk assessment, and financial reporting. Mr Shaw's expertise is impeccable.

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Frequently Asked Questions

The TCS, tax collected at source, is a tax that the sellers collect from the buyer at the time of sale of specified goods and services as per the Income Tax Act. Once collected, it is then deposited with the government. Furthermore, it is important to understand the TCS section and the rate that may apply under the tax regulations. 

No, TCS is applicable only to specified goods and services mentioned under Section 206C of the Income Tax Act. This includes items such as alcohol, timber, scrap, and other minerals. 

Yes, buyers can claim the credit for the TCS paid by filing their ITR. 

If the buyer fails to provide the PAN card, the TCS rate will either be double the prescribed rate or 5%, whichever is higher. 

Yes, as per the TCS rate chart, the rate of the sale of a motor vehicle is 1%.