Distinguishing TDS and TCS

The Ministry of Finance recently made a bold move to check international spending. It announced that foreign remittances using a credit card under the liberalised remittance scheme (LRS) face a TCS hike from 5 per cent to 20 per cent from July 2023 onwards. This announcement has led to a buzz of questions. Some of them are - What is TCS, how does it differ from TDS (tax deducted at source), does it mean I will pay more tax overall? Let's look into these questions. What is TCS TCS is a tax collected by the sellers of specific goods or services from you when you buy their products or services. For instance, according to Indian tax laws, if you buy a car worth more than Rs 10 lakh, the car dealer must collect 1 per cent TCS from you. So, if the car costs Rs 15 lakh, the dealer will collect an additional Rs 15,000

This article was originally published on May 25, 2023.