TCS Rate Chart for FY 2024-25

Tax Collection at Sources, shortly and popularly known as TCS, is an extra amount that is to be collected as tax by the seller of the specified goods from the purchaser/ buyer. Notably, TCS is to be collected over and above the sale amount and the same is to be remitted to the tax authorities i.e. Government. The present article highlights the basic briefing of provisions of TCS as covered under the Income Tax, provides the TCS rate chart as applicable for the Financial Year 2024-25 i.e., Assessment Year 2025-2026 and the TCS sections and rates.

What is TCS?

 Tax Collected at Source (TCS) is a tax that sellers collect from buyers at the time of sale for specified goods and services, as per Section 206C of the Income Tax Act. It applies to transactions involving goods like alcohol, timber, minerals, and certain foreign remittances. The seller collects TCS at a prescribed rate and deposits it with the government. Buyers can claim credit for the TCS paid while filing their income tax returns. Buyers and sellers must understand the TCS sections and rates TCS ensures tax compliance and prevents tax evasion by tracking high-value transactions.  

What is the TCS Rate?

 The Tax Collected at Source (TCS) rate varies based on the type of goods or services involved, as specified under Section 206C of the Income Tax Act. For instance, the TCS rate for the sale of scrap is 1%, while for the sale of minerals like coal and lignite, it is also 1%. For foreign remittances under the Liberalized Remittance Scheme (LRS) exceeding ₹7 lakh, the TCS rate is 5% for general transactions and 20% for overseas tour packages. The TCS rate chart ensures proper tax collection and compliance, and buyers can claim TCS credit while filing their income tax returns.  

Basic briefing of provisions of TCS rate as covered under the Income Tax 

Section 206C of the Income Tax Act, 1961 covers the particulars of the goods on the sale of which TCS needs to be collected by the seller from the purchaser/ buyer. Before understanding the TCS rates for FY 2024-25, it is important to understand the ‘classification of buyers’ and ‘classification of sellers’ for the purpose of TCS. The same is explained in the TCS & TCS rate on sale of goods table below –

Classification of Buyers	Classification of Sellers
A buyer is a person who purchases goods, except for the following: Central Government State Government Clubs (e.g., social clubs, sports clubs) Embassy or High Commission Legation, consulate, commission, or trade representation of a foreign state	A seller includes the following entities: Central Government State Government Partnership firm Local authority Statutory corporation/authority Registered company Co-operative society Any person/HUF subject to tax audit under the Income Tax Act

TCS Rate Chart for FY 2024-25 (Assessment Year 2025-2026)

The following table summarizes the applicable TCS section list and the corresponding TCS rate chart for FY 2024-25–

Nature of Payment	TCS Rate (%)
Alcoholic liquor for human consumption, tendu leaves	1
Timber (forest lease or other modes)	2.5
Other forest produce (excluding timber, tendu leaves)	2.5
Scrap	1
Parking lot, toll plaza, mining, quarrying	2
Tendu leaves	5
Minerals, bullion, jewellery	1
Sale of motor vehicle	1
Cash sale of goods (excluding bullion)	1
Service provision (excluding Ch-XVII-B)	1
Tour package	5
LRS – Educational loan (financial institution)	0.5
LRS – Other purposes (Liberalized Remittance Scheme)	5
Sale of goods	0.1
LRS – Education/medical treatment (excluding Code P)	5

 Note: If PAN is not provided, the TCS rate will be either double the applicable rate or 5%, whichever is higher.

Conclusion

 In conclusion, Tax Collected at Source (TCS) serves as an important mechanism to ensure tax compliance on high-value transactions involving specified goods and services. The TCS rates for FY 2024-25 vary depending on the nature of the transaction, such as the sale of goods like timber, scrap, and minerals, as well as services like tour packages and foreign remittances under the Liberalized Remittance Scheme (LRS). Understanding the classification of buyers and sellers and the applicable TCS rate Chart for FY 2024-25 is essential for both sellers and buyers to ensure correct tax collection and compliance. By adhering to these provisions, the government aims to improve tax collection efficiency and prevent tax evasion.

FAQs

1. What is TCS (Tax Collected at Source)?

TCS is a tax collected by the seller from the buyer at the time of sale of specified goods and services, as per the Income Tax Act. It is then remitted to the government. It is important to understand the TCS sections and rates to comply with tax regulations. 

2. What is the rate for the sale of alcoholic liquor as per TCS rate chart?

The rate for the sale of alcoholic liquor for human consumption is 1%, as per TCS rate chart.

3. Is TCS applicable on all goods and services?

No, TCS is applicable only on specified goods and services as per Section 206C of the Income Tax Act. These include items like alcohol, timber, scrap, and minerals, as well as given in the TCS rate chart.

4. Can buyers claim a credit for TCS paid?

Yes, buyers can claim credit for the TCS paid while filing their income tax returns, which is set off against their total tax liability.

5. What happens if a buyer doesn’t provide a PAN?

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

6. Is TCS applicable on the sale of motor vehicles?

Yes, as per the TCS rate chart, the rate for the sale of motor vehicles is 1%.

7. What is the TCS rate on tour packages under the Liberalized Remittance Scheme (LRS)?

The TCS rate for tour packages under the LRS is 5%.

8. Are there any exemptions to TCS?

Yes, certain categories of buyers, such as the Central Government, State Government, embassies, and foreign trade representations, are exempt from TCS.

9. What is the TCS rate on the sale of goods other than bullion?

The TCS rates for FY 2024-25 on the sale of goods, excluding bullion, is 1%.

10. How is TCS different from TDS (Tax Deducted at Source)?

While TDS is deducted by the payer of income on payments made to the payee, TCS is collected by the seller from the buyer at the time of sale. Both are used to ensure tax compliance, but TDS applies to income payments, while TCS applies to sales of goods and services.

About the Author

IndiaFilings
Post By IndiaFilings.

Updated on: February 18th, 2025