Generally, TCS is the tax collected by a seller at the time of sale of goods or services, while Tax Deducted at Source (TDS) is the amount levied by the government as tax.
The move comes at a time when the government is going to impose 20 per cent Tax Collection at Source (TCS) on certain international expenses from July 1.
According to a senior official, the government is looking to link tax collected at source for payments made by individuals to tax deducted from their income sources, a move that will help ensure that cash flows of individual taxpayers are impacted. Don’t be
The move comes at a time when the government is going to impose 20 per cent Tax Collection at Source (TCS) on certain international expenses from July 1.
Generally, TCS is the tax collected by a seller at the time of sale of goods or services, while Tax Deducted at Source (TDS) is the amount levied by the government as tax.
Read also: No TCS on credit, debit card forex transactions up to Rs 7 lakh: Govt
Giving relief to small taxpayers, the government has exempted transactions up to Rs 7 lakh from TCS. Chief Economic Advisor (CEA) V Ananth Nageswaran has said that therefore, transactions done by most will not be covered under the 20 per cent TCS.
Defending the decision, he said, “And it (government) also tries to link TCS with your TDS so that if TCS is paid by you, it has to show less TDS. It is just a matter of ensuring that That you are not impacted from a cash flow perspective.” It will also provide great relief to those who are worried about this annoyance or irritation of seeing this TCS in addition to TDS, he said at industry body CII’s event on Thursday.
The 20 per cent TCS charge on international credit card spends has come into effect from July 1.
Facing backlash, the finance ministry had last week exempted spending up to Rs 7 lakh from the TCS purview.
“The exemption was given… passing the TDS deduction to TCS will also ensure that common taxpayers do not see the impact as far as they are concerned,” he added.
Furthermore, the CEA said that one approach is that “you only needed to put in 1 percent or 5 percent so that you could track it”.
But there are people who are happy to be outside the tax net even after paying 1 per cent or 5 per cent. So there should also be a deterrent effect, he said.
According to him, there is data available with the government which indicates that this mechanism is not only misused by a small group of people but the quantum involved is quite high.
At present, foreign medical treatment and education expenses are exempt from TCS up to Rs 7 lakh per annum. A 5 per cent fee is charged on spending above Rs 7 lakh.
The TCS rate for education loan borrowers is 0.5 per cent.
(This story has not been edited by News18 staff and is published from a syndicated news agency feed – PTI,
