Govt plans to link tax collected at source with tax deducted at source: CEA

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 as tax by the government

Press Trust of India New Delhi
taxes, tax, taxing, audit

Listen to This Article

The government is attempting to link tax collected at source for payments made by individuals with tax deducted from their income sources, a move that will help in ensuring cash flows of the individual taxpayers are not impacted, according to a senior official.

The move also comes at a time when the government is set to impose a 20 per cent Tax Collection at Source (TCS) on certain international spends 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 as tax by the government.

The government has exempted transactions up to Rs 7 lakh from the TCS, providing relief to small taxpayers. So, bulk of the transactions made by most will not be covered under 20 per cent TCS, Chief Economic Advisor (CEA) V Anantha Nageswaran has said.

Defending the decision, he said, "And it (government) also attempts to link the TCS with your TDS such that if there are TCS payment made by you it has to reflect a lower TDS. Such that it simply is a matter of making sure that you are not affected from a cash flow perspective."

It will also provide a huge amount of relief for people who are concerned about this annoyance or irritation of seeing this TCS apart from TDS, he said at industry body's CII's event on Thursday.

The 20 per cent TCS levy on international credit card spends is to come into force from July 1.

Also Read

TCS Q4 review: Near-term growth to moderate, demand levers intact: Analysts

TCS Q4 Preview: Revenue may rise up to 18% YoY; EBIT margin seen at 25%

Capital gains tax should be rationalised; need simpler ITR form: Experts

How does outgoing TCS CEO Gopinathan's salary compare to other IT execs?

Passengers to get full refund when downgraded from higher cabin: DGCA

Govt plans PLI for chemicals used in pharma, other industries: Mandaviya

Govt's rice procurement reaches 52.06 MT so far; pays Rs 1.6 trn MSP

Exports to Germany may get impacted as it enters recession: Traders

On the job: India's poorer states progress in creating employment

India witnessing snowball effect; set to see exponential growth: WEF prez

Facing backlash, the finance ministry last week, exempted up to Rs 7 lakh spend from the TCS ambit.

"The exemption was done... The pass through of TCS into TDS deduction will also make sure that ordinary taxpayers do not see impact as far as they are concerned," he said.

Further, CEA said one point of view is that all that "you needed was to levy 1 per cent or 5 per cent so that you can track it".

But there are people who are happy to stay out of tax net by even paying 1 per cent or 5 per cent. So there has to be a deterrent effect as well, he noted.

According to him, data is available with the government that do point out that this mechanism has been not just abused by a small set of people but the volumes involved are fairly substantial.

Currently, overseas medical treatment and education expenses up to Rs 7 lakh a year is exempt from TCS. A 5 per cent levy is charged on expenses exceeding Rs 7 lakh.

For those who have availed education loans, the rate of TCS is 0.5 per cent.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: May 26 2023 | 4:30 PM IST

Explore News