TCS (Tax Collected at Source) in GSTR-2A represents the tax collected by e-commerce operators (like Amazon or Flipkart) on net taxable supplies made by sellers through their platforms. It is a 1% tax (0.5% CGST + 0.5% SGST or 1% IGST) collected under Section 52 of the CGST Act. These amounts, filed by operators in GSTR-8, appear in the seller's GSTR-2A and are credited to their electronic cash ledger.
TCS stands for Tax Collected at source. In the GST regime, every e-commerce operator needs to collect 0.5% under CGST Act and 0.5% under SGST Act; In case of inter-state transactions, 1% (under IGST Act) on the net values of taxable supplies made through the e-commerce operator.
5 Legal & Smart Ways to Avoid Paying 20% TCS on Foreign Remittances in 2025
Under section 206C (1H) of the Income Tax Act, TCS is mandated if the seller's annual turnover exceeds Rs. 10 crore. Sellers are also required to deduct TCS if the aggregate sale amount received from a single buyer exceeds Rs. 50 lakh in a financial year.
1. Tax collection at source (TCS) is an additional amount collected as tax by a seller of specified goods from the buyer at the time of sale over and above the sale amount and is remitted to the government account.
TCS Applicability for NRIs
TCS applies only to Indian residents. Non-Resident Indians (NRIs) with an NRE account who are repatriating funds or sending money to their permanent residence abroad are not required to pay TCS.
Tax Collected at Source or TCS -Example
To understand this tax let us explain the process with the help of an example. If a buyer is purchasing a car that costs Rs 10.01 lakhs then an amount of Rs 10,010 would be payable as TCS.
To avoid or minimise TCS on foreign remittances, individuals can consider keeping remittances below the ₹7 lakh threshold within a financial year. Additionally, remittances for education funded through loans from specified financial institutions are subject to a reduced TCS rate of 0.5% on amounts above ₹7 lakh.
Login to the GST Portal with valid credentials. Click the Services > Returns > TDS and TCS credit received command. 2. The TDS and TCS credit received page is displayed.
If your income is above the taxable annual limit and the TCS paid is more than the total tax payable, TCS will be refunded to the assessee's bank account. If your income is above the taxable annual limit and the TCS paid is less than the total tax payable, the TCS paid will be adjusted to the total tax liability.
This is an exemption designed to ease the financial burden on students studying abroad. For other educational remittances, not covered by an Education Loan, the rate is 5% for amounts above INR 10 lakh. Overseas tour packages attract a TCS of 5% up to INR 10 lakh and 20% thereafter.
To avoid excessive TDS, meaning Tax Deducted At Source, NRIs can use tax-efficient strategies:
The TCS is to be calculated on a buyer basis. The threshold limit u/s 206C(1H) is 50 lakh in a financial year. So, you have to collect @0.1% on over and above Rs 50 lakh.
To claim a TCS refund, suppliers should log in to the GST portal, navigate to the "Refunds" section, and select "TCS refund." They must enter relevant details such as the period for which the refund is claimed and the amount, upload any supporting documents, and submit the claim electronically.
The seller should collect tax from the buyer in addition to the value of the goods/services. A buyer is a person who purchases specific goods. He is liable to pay TCS amount along with the bill amount in applicable cases.
Key Takeaways from TCS Changes (Effective April 1, 2025):
TCS will no longer apply on remittances made under LRS for educational purposes if the funds are financed through an education loan. Section 206C(1H), which required TCS on the sale of goods exceeding ₹50 lakh, has been removed.
What is TCS under GST. Tax Collected at Source (TCS) under GST means the tax collected by an e-commerce operator from the consideration received by it on behalf of the supplier of goods, or services who makes supplies through the operator's online platform.
Status of TDS/TCS Statement
✅ TCS under GST is calculated on the "net value of taxable supplies" — exclusive of GST. This is different from Income Tax TCS, where it's generally collected on the gross invoice value (including taxes).
You can claim a TCS refund in these scenarios:
Maximum marginal rate is the highest rate of tax at any income level. This means for those with incomes between Rs 2 crore and Rs 5 crore, 39% will be the highest applicable tax rate, and for those with incomes above Rs 5 crore, it will be 42.74% — the highest tax rate since 1992.
The Union Budget 2025 introduced a major income tax relief for the middle class – making annual incomes up to ₹12 lakh completely tax-free* under the new regime. This means if your taxable income is ₹12 lakh or less, you owe zero tax* for the year.
TCS on Sale of Goods with Examples
TCS rates vary depending on the reason for the remittance. For example: Medical treatment and educational expenses (not covered by specified loans) attract 5% TCS if the amount exceeds Rs. 10,00,000. Other remittances, like investments or tour packages, can attract up to 20% TCS.