You can now use TCS credit to reduce the TDS on your salary. Here's how.
Subscribe to enjoy similar stories. Did you book a foreign holiday recently and have to shell out an extra 5% or 20% in tax collected at source (TCS)? There’s good news if you’re a salaried employee. Starting 15 October, salaried individuals can adjust such TCS payments against the tax deducted at source (TDS) on their salaries.
Previously, they could only claim a refund of the TCS when filing their tax returns. This affected salaried individuals in particular as professionals could always factor in the TCS while computing advance tax, said Prakash Hegde, a chartered accountant in Bengaluru. In this year’s budget the finance minister had proposed that individuals be allowed to claim TCS credit against the TDS on their salary.
The Central Board Direct Taxes (CBDT) passed the proposal last week and issued a new form called Form 12BAA. For salaried employees, TCS is mainly deducted on payments under the Reserve Bank of India’s Liberalised Remittance Scheme (LRS). There’s also 1% TCS on cars priced above ₹10 lakh.
“All foreign remittances under LRS attract TCS, including tuition fees of foreign universities, gifts to relatives, repayments of overseas loans, and certain overseas investments, among other things," said S Sriram, partner at Lakshmikumaran & Sridharan Attorneys (LKS). Also read: Jinesh Gopani, former Axis MF star, plots comeback with Taksh AIF The TCS rate varies depending on the type of payment and whether the amount spent under LRS exceeds ₹7 lakh (see graphic). “Credit card payments made while travelling abroad are currently not considered as LRS payments, and are thus not subjected to TCS.
Read more on livemint.com
