TCS (Tax Collected at Source) is a 5% tax collected by authorized dealers (like banks or payment providers) on outward remittances under the Liberalised Remittance Scheme (LRS) that exceed ₹7,00,000 in a financial year. It was increased from 0.5% to 5% starting July 1, 2023.

If your total remittances to India during the financial year (April to March) exceed ₹7,00,000, Indian tax law requires the remittance provider to collect TCS at 5% on the entire amount sent above that threshold. For example, a $10,000 transfer (approx ₹8.3 lakh) would trigger TCS on ₹1.3 lakh, amounting to ~₹6,500.

TCS is calculated at 5% on the aggregate value of all remittances exceeding ₹7,00,000 in a financial year. For instance, if you send $5,000 (₹4.15 lakh) in April and $10,000 (₹8.3 lakh) in June, your total is ₹12.45 lakh — so TCS applies to ₹5.45 lakh, resulting in a ₹27,250 TCS liability.

Yes, TCS is not a final tax — it's a prepayment credited against your income tax liability. If your applicable tax rate is below 5% or you have no taxable income in India, you can claim a refund while filing ITR. For example, ₹20,000 of TCS paid in FY 2023-24 can be claimed back if no tax is due.

TCS applies only if the recipient in India is receiving funds under LRS and the total remittances exceed ₹7,00,000 in a financial year. Personal gifts below this threshold, such as $8,000 (approx ₹6.7 lakh), are exempt from TCS.

The 5% TCS rate on LRS remittances over ₹7,00,000 was introduced in Union Budget 2023 and became effective on July 1, 2023. Prior to this, TCS was 0.5% for education or medical purposes and 5% for other purposes starting October 1, 2020.

Yes, TCS applies based on the LRS threshold, not the account type. If remittances to an NRO account exceed ₹7,00,000 in a financial year, 5% TCS is collected on the excess. NRO accounts are subject to Indian tax reporting regardless.