TCS at 20%: not a tax, a deposit

4 min · For educational purposes only

Since October 2023, LRS remittances for non-education and non-medical purposes attract Tax Collected at Source at 20% above the ₹10 lakh threshold. This is recoverable — not a permanent leak.

How TCS works

When you remit, your bank collects TCS at 20% on amounts above ₹10 lakh in a financial year (for investment-related purposes). The TCS is credited to your PAN and appears in your Form 26AS. At year-end, you offset it against your advance tax liability or claim a refund.

The misunderstanding is that TCS is an expense. It is not. It is a cash-flow hit — your money is parked with the tax authority for up to 18 months before you recover it through your return.

Planning around TCS

Time remittances to compress the gap between collection and refund
Use TCS as advance tax against your annual liability instead of paying separately
Coordinate with your CA so the Form 26AS credit is correctly mapped
If you remit through multiple banks, reconcile aggregate TCS to avoid duplicate collection

Key takeaways

TCS at 20% is a cash-flow event, not a permanent cost.
Always reconciled at year-end through your ITR.
Plan the timing — money parked with the exchequer is opportunity cost.