NRI Income Tax & Compliance

What is TCS for NRIs?

By Pankaj Shaw |Last Updated: February 11, 2026

Tax collected at Source (TCS) is a mechanism where the sellers collect tax from buyers on specified high-value transactions. It helps in tracking large outflows and extends the tax base. For NRIs, TCS mainly applies to foreign remittances and travel under the LRS (Liberalised Remittance Scheme), with recent changes in Budget 2026 that simplify the rates to 2% for several categories. Additionally, an NRI must file an ITR if TCS is collected on foreign remittances or if their overall India-sourced income is more than the basic exemption limit. In this blog, we will cover everything related to TCS for NRIs.

TCS stands for Tax Collected at Source. It's a tax that the seller pays, which he collects from the buyer on sale. The seller must deposit the TCS with the tax authorities within the applicable due dates. The provisions related to TCS are governed under Section 206C of the Income Tax Act. An individual must have a TAN (Tax Collection Account Number) to be eligible to collect TCS.

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Frequently Asked Questions

TCS stands for Tax Collected at Source, where banks or sellers collect tax upfront on high-value transactions like property purchases exceeding Rs. 50 lakh at 1% under Section 194-IA, overseas remittances under LRS by resident family members, or scrap sales.

For NRIs, TCS applies directly when they purchase a property or vehicle in India, but indirectly when Indian residents transfer funds abroad on their behalf under LRS, with credits claimable in the payer's or recipient's ITR against final liability.

NRIs directly face TCS on property purchase over Rs. 50 lakh, where they, as buyers, need to ensure 1% collection under Section 194-IA through Form 26QB on motor vehicles that cost more than Rs. 10 lakh at 1 % from dealers, and on scrap sales at 1%. However, for LRS remittances, TCS is collected from the Indian resident sender acting for the NRI and not the NRI themselves.

Post-Budget 2026, the LRS threshold is Rs. 10 lakh per financial year per individual, with rates above this set at 0% for education through loans, 2% for education fees or medical expenses (down from 5%), 2% flat for foreign travel packages (previously 5-20%) and 20% for other purposes like overseas property or investments. NRIs benefit indirectly as these lower costs apply to remittances made by their Indian family.

An NRI purchasing a property worth over Rs. 50 lakh in India, they, as buyers, need to collect and deposit 1% TCS under Section 194-IA via Form 26QB, which is creditable directly in their ITR-2 filing. Under Budget 2026, this is simplified by allowing PAN-linked challans instead of TAN requirements.

What is TCS for NRIs?

Frequently Asked Questions

What is TCS?

How Does TCS Apply to NRIs?

When do NRIs Directly pay TCS?

What are the Current LRS TCS rates Post-budget 2026?

What TCS Rules Apply to NRI When Buying a Property in India?

What is TCS for NRIs?

Frequently Asked Questions

What is TCS?

How Does TCS Apply to NRIs?

When do NRIs Directly pay TCS?

What are the Current LRS TCS rates Post-budget 2026?

What TCS Rules Apply to NRI When Buying a Property in India?