On 28 September 2026 the Central Board of Direct Taxes gave audit cases until 21 November to file their returns. For most individual clients, the filing season ended months earlier. Even so, many advisors are now fielding a quieter question from clients who sent money abroad in tax year 2025-26. They want to know where their TCS refund is, and some discover that their return never claimed it.
The answer usually lies in paperwork rather than in tax law. TCS collected on a foreign remittance is an advance payment of the client's own income tax. It comes back only when the right amount sits against the right PAN and is claimed in the right year's return. When any of those three things slips, the money waits, and this year's Budget has given clients more time to repair the gap. The guide to TCS on foreign remittance sets out the wider rules behind each step.
How TCS on a remittance becomes a refund
TCS, or tax collected at source, is charged by the bank when a resident sends money overseas under the Liberalised Remittance Scheme. The scheme allows each person to remit up to USD 250,000 in a financial year. In tax year 2025-26, investment remittances carried TCS of 20 per cent on the amount above ₹10 lakh. The Finance Act, 2025 had raised that threshold from ₹7 lakh. The bank deposits the tax with the government against the client's PAN.
That deposit then appears in Form 26AS and the Annual Information Statement. The Income Tax Department uses these two records to check every credit a taxpayer claims. When the client files a return, the TCS is entered as tax already paid, alongside TDS and advance tax. If the total paid is higher than the tax due on the year's income, the difference becomes a refund. The department pays it after processing the return. TCS is therefore not a separate cost, although it ties up the client's cash for many months.
Where TCS refund claims go wrong
Consider, for example, a client who remitted ₹40 lakh in tax year 2025-26 to invest overseas. The bank collected TCS of 20 per cent on the ₹30 lakh above the threshold, which comes to ₹6 lakh. Suppose the return lists only salary TDS and leaves the TCS schedule empty. The department then computes the year without that ₹6 lakh. The client may receive a small refund, or even a demand, while the larger sum stays unclaimed.
In practice, three problems explain most stalled claims. The first is a missing entry, where the bank has not reported the collection or has reported it against a wrong PAN. The second is a missed claim, where the TCS appears in Form 26AS but the return leaves it out. The third is a timing error, because the credit belongs to the year in which the bank collected the tax. A remittance made on 28 March 2026 counts in tax year 2025-26, even if the overseas investment completed in April.
Refunds have also slowed for reasons that have nothing to do with TCS. In February 2026 the Minister of State for Finance told Parliament that refunds for 2025-26 stood at ₹3.34 lakh crore, against ₹4.12 lakh crore in 2024-25. He linked part of the slowdown to data-led campaigns that ask selected taxpayers to review returns already filed. Those campaigns looked partly at unreported foreign assets, so a client who remitted money for investment should expect the return to be read with care.
The 31 March 2027 window for a TCS refund
The Finance Act, 2026 changed the time limit for revising a return. A client who filed for tax year 2025-26 and missed the TCS can now revise the return until 31 March 2027. The earlier cut-off was 31 December. A revision filed after 31 December 2026 attracts a fee under the new section 234I. The fee is ₹1,000 where total income is up to ₹5 lakh, and ₹5,000 in other cases. The window can also close earlier if the department completes an assessment first.
A client who did not file at all has a different route. The belated return for tax year 2025-26 is due by 31 December 2026, with a late fee of ₹1,000 or ₹5,000 depending on income. The TCS can be claimed in that return in the usual way. For both groups the practical deadline is therefore 31 December, because waiting beyond it only adds a fee for the client to pay.
What changes for remittances made from April 2026
Remittances made since 1 April 2026 fall under the Income-tax Act, 2025, where TCS is governed by Section 394. Banks now issue Form 133 as the TCS certificate instead of Form 27D, as explained in our note on Form 133 and TCS certificates. The credit for these remittances will be claimed in the return for tax year 2026-27, which clients file in 2027. The rate on investment remittances above ₹10 lakh is still 20 per cent, so the amounts waiting for a refund have not become smaller.
Salaried clients have an option that shortens the wait. Under section 392(4)(a) of the new Act, an employee can give the employer Form 122 and report TCS already collected in its Part C. Form 122 replaced the earlier Forms 12B and 12BAA. The employer can then take that TCS into account when it deducts tax from salary for the rest of the year. As a result, the client recovers the money through monthly pay instead of a refund that arrives after the year ends.
What advisors should check before 31 December
The work is a reconciliation exercise, and it is best done client by client while the fee-free window is open. The e-filing portal's Tax Credit Mismatch service shows any gap between the TDS and TCS reported in a return and the amounts in Form 26AS. According to the portal, such gaps are fixed either by the taxpayer or by the collector correcting its own statement. The steps below follow that order.
- Download Form 26AS and the Annual Information Statement for tax year 2025-26, and match every TCS entry to the bank's Form 27D certificates.
- Run the Tax Credit Mismatch service on the e-filing portal to compare the TCS claimed in the return with Form 26AS.
- Where an entry is missing or carries a wrong PAN, ask the bank in writing to correct its TCS statement before any return is revised.
- File the revised or belated return by 31 December 2026, so that any missed TCS is claimed without a revision fee.
- For salaried clients remitting in tax year 2026-27, consider Form 122 so that the employer accounts for the TCS during the year.
Advisors who introduce eligible clients through Raveum's partner page will recognise the pattern, because each investment remittance above the threshold produces a certificate that has to be tracked into the right return. A refund also needs to be kept in proportion. It returns tax the client has already paid, and it says nothing about the overseas investment itself. That investment can lose value, be hard to sell, pay no distributions or move with the rupee, whatever happens to the TCS.
The 28 September extension was a reminder that the tax calendar still has moving parts. For clients who invested abroad, the date that matters more is 31 December, the last day to repair a missed TCS claim without paying for the repair. Most of these cases are settled by a careful comparison of three documents, and the TCS guide for advisors and CAs explains the rules each one reflects. An advisor who runs that comparison in October leaves the client nearly three months to fix any gap at no extra cost.
Frequently asked questions
How does a client claim a TCS refund in the income tax return?
The client enters the TCS shown in Form 26AS in the TCS schedule of the return for the year the bank collected it. The department adds it to TDS and advance tax. If the total exceeds the tax due, the excess is refunded after processing, to the bank account validated on the portal.
What should a client do if TCS is not showing in Form 26AS?
The client should ask the bank that collected the tax to check its quarterly TCS statement. A missing entry usually means the bank has not filed the statement or has quoted a wrong PAN. Once the bank corrects it, the credit appears in Form 26AS and the Annual Information Statement, and the return can then claim it safely.
Can a client still claim TCS that was missed in the return filed in 2026?
Yes. After the Finance Act, 2026, a return for tax year 2025-26 can be revised until 31 March 2027, unless the assessment is completed first. A revision filed after 31 December 2026 attracts a fee of ₹1,000 or ₹5,000 depending on total income, so filing the corrected return before that date costs the client less.
Can TCS be adjusted against tax on salary instead of waiting for a refund?
Yes, for salaried clients. Under the Income-tax Act, 2025, an employee can submit Form 122 to the employer and report the TCS already collected during the year. The employer then takes it into account when deducting tax from salary for the remaining months, so the cash comes back through monthly pay rather than through a refund later.
Can parents claim TCS collected on a remittance made in a child's name?
Where the child's income is assessable in a parent's hands, CBDT rules from October 2024 allow the TCS credit to go to that parent. The child gives the bank a declaration naming the parent, with PAN and reasons, and the bank reports the tax accordingly. Gift tax and clubbing questions should be checked with the family's CA.
Does getting TCS back make an overseas investment low risk?
No. A TCS refund returns tax the client has already paid, and nothing more. The overseas investment carries its own risks, including loss of capital, illiquidity, falling property values, tenants leaving, distributions not being paid, leverage and currency movements. Whether it suits a client depends on their goals and circumstances, which the advisor and the client's CA should assess together.
This article is for general education and is not tax, legal or investment advice. Rules change and depend on individual circumstances. All investing involves risk, including loss of capital, illiquidity and currency movements. Offerings on Raveum are available to eligible investors only and are not open to the general public.
