By: FPJ Web Desk | May 19, 2023
After the rise in TCS on credit card payments and remittances abroad raised concerns, the government has clarified that it will only apply on remittances under LRS to ensure tax compliance.
The Tax Collected at Source will be applicable on tour packages, just as it is payable for sale of forest produce, alcohol, tobacco and other similar products.
Taxpayers receiving it can claim credit for it under their regular income, while those paying it can use it against their overall tax liability, and adjust it against advanced taxes.
The new TCS rate for remittances under LRS at 20%, is the same as the direct taxes under the new tax regime which is 20% for an income of more than Rs 12 lakhs and 30% for an income of Rs 15 lakhs.
The policy has also been shaped by the observation that the money people spend or send abroad is a lot more than their disclosed income, in several cases. Hence TCS will be instrumental for income tax compliance.
The TCS which won't be applicable on medical and educational expenses, will largely affect high net worth individuals who invest in assets such as stocks and real estate abroad.