The latest updates about Tax collected at source or TCS is something that you need to be updated at the earliest. The tax that is included while making a purchase. Many questions arise about tax collection at the source that could easily be resolved in the simplest manner. You have the necessity to send money abroad then TCS is sure to effect you in a manner that you need to get updated.
“Tax Collection at Source” is applicable for all LRS transactions w.e.f. October 1st, 2020. This would not effect our future remittance business as remitters can get a TCS certificate from an authorized dealer to claim such TCS paid in ITR or request refunds in case of lower or nil tax liability.
1. Why do you pay tax?
You pay tax on a yearly basis. You hear that it comes back to you. Now the questions arise is ‘How?’. Your tax money is used for government and public expenses, like repairing roads, maintaining public places, providing rations or subsidies in times of natural calamity, protection from militants through defense forces, etc. You pay for the wellbeing of yourself and your countrymen. You are being taxed for the property, income, goods & services, etc., thereby maintaining the economic equilibrium of the country.
2. What is TCS or Tax collection at sources?
The tax collected at source (TCS) is something that you pay while making a purchase
3. Did you know that Tax collection at source or TCS starts from October 1st 2020?
Any amount sent abroad to purchase foreign tour packages and other foreign remittance above 7 Lakhs falls under the TCS. The Finance Act of 2020 has notified implementation of TCS on March 27th 2020 with effect from October 1st 2020.
4. How does TCS effect me while I travel abroad?
You will have an increase of 5% for your foreign tour packages & other related expenses in the form of tax.
5. Where all I have to spend more on my travel overseas?
This tax will reflect on the list of overseas travel expenses that you will do, which includes
- Travel expenses
- Hotel stay payments,
- Boarding or lodging fee
- Entry fee to historical monuments, museums, etc.
- Dining expenses
- And much more
6.Did you know that you can get a decrease of 0.5% for an overseas educational loan?
You can get a 0.5% rate, less on the loan amount exceeding Rs.7 Lakhs that is taken for overseas education from any authorized financial service provider.
7. You don’t have a PAN/ Aadhar you have to pay more. How?
The standard rate of Tax collection at source is 5%. But you pay more for not having PAN Card/ Aadhar. You pay more than 10% without the Aadhar / PAN card. So time to get it rather than pay extra.