Individuals miffed at tax collection at source (TCS) proposals have now been offered a small relief – provided they have salary income.
At present, a salaried employee may declare income, such as bank interest and rent, to their employer, who factors this and, accordingly, deducts a higher tax against the monthly salary. The employee then does not have to worry about paying advance tax as adequate tax has already been withheld.
A similar norm comes into effect from Oct 1.The salaried employee will be able to declare TCS and the employer will factor this in, resulting in a lower TDS against salary income. Thus, it will avoid cash-flow issues. Further, if a refund was due, owing to TCS, the individual taxpayer will no longer have to wait for it as it is adjusted against TDS on salary income.TCS applies to a wide range of remittances made under Liberalised Remittance Scheme (LRS) of Reserve Bank of India. It permits an individual to remit up to $2.5 lakh per year, without seeking prior approval.
Thus far, purchase of an overseas tour package pinched the pocket – it meant a 5% TCS for a remittance of up to Rs 7 lakh; if the expenditure was higher, TCS was 20%. Or for that matter, sending a child overseas meant that TCS at 5% was deducted for any remittance above Rs 7 lakh (the rate was lower for remittances via education loans).
In short, the Budget has added a sweetener to TCS provisions for salaried individuals.
At present, a salaried employee may declare income, such as bank interest and rent, to their employer, who factors this and, accordingly, deducts a higher tax against the monthly salary. The employee then does not have to worry about paying advance tax as adequate tax has already been withheld.
A similar norm comes into effect from Oct 1.The salaried employee will be able to declare TCS and the employer will factor this in, resulting in a lower TDS against salary income. Thus, it will avoid cash-flow issues. Further, if a refund was due, owing to TCS, the individual taxpayer will no longer have to wait for it as it is adjusted against TDS on salary income.TCS applies to a wide range of remittances made under Liberalised Remittance Scheme (LRS) of Reserve Bank of India. It permits an individual to remit up to $2.5 lakh per year, without seeking prior approval.
Thus far, purchase of an overseas tour package pinched the pocket – it meant a 5% TCS for a remittance of up to Rs 7 lakh; if the expenditure was higher, TCS was 20%. Or for that matter, sending a child overseas meant that TCS at 5% was deducted for any remittance above Rs 7 lakh (the rate was lower for remittances via education loans).
In short, the Budget has added a sweetener to TCS provisions for salaried individuals.