TCS — collector-side compliance

When a seller's turnover exceeds ₹10 crore and sells goods worth more than ₹50 lakh to a single buyer in a year, they must collect TCS at 0.1% (0.075% during COVID relief). But if the buyer's turnover also exceeds ₹10 crore, Section 194Q kicks in and the buyer must deduct TDS at 0.1% — in which case the seller's 206C(1H) obligation stops. Buyer's TDS obligation always prevails.

This creates a coordination need — sellers must ask buyers annually whether they are covered under 194Q. Most sellers now include a standard declaration in vendor onboarding to capture this once a year.

From 1 October 2023, TCS on Liberalised Remittance Scheme (LRS) remittances is: 5% up to ₹7 lakh (for education / medical treatment above certain criteria); 5% above ₹7 lakh for education via loan; 20% above ₹7 lakh for other purposes — foreign investments, gifts, foreign real estate, foreign stock purchases. Overseas tour packages attract 5% up to ₹7 lakh and 20% above.

TCS is not a tax — it is a credit against the buyer's ITR. But it creates a serious cash-flow surprise: a ₹15 lakh foreign stock investment now triggers ₹1.6 lakh TCS upfront. Track it in AIS and claim credit in your ITR via Schedule TCS.