Government of India link TCS with TDS

28/05/2023

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Government of India link TCS with TDS

Chief Economic Advisor (CEA) V Anantha Nageswaran announced at the CII Annual Session 2023 that the government might be linked tax collected at source (TCS) for payments made by individuals with tax deducted from their income sources (TDS). He also explained that this move will ensure cash flows of the individual taxpayers are not impacted.

The government introduced the tax collected at source or TCS on May 19. The Government of India is set to levy 20% Tax Collection at Source on international spends from July 1 as per the new regulations.

What is the difference between TCS and TDS?

The tax which is collected by a seller at the time of sale of goods or services is called TCS, while the amount collected as tax by the government Tax Deducted at Source (TDS).

Chief Economic Advisor stated that the government has relieved transactions up to Rs 7 lakh from the TCS for providing relief to small taxpayers.

Due to relaxation under this the bulk of the transactions happened by most will not be covered under 20 per cent TCS.

Benefits of linking TCS with TDS:

It simplifying a matter of making assured that individual is not affected from a cash flow perspective.
It will also offer a huge amount of relief for people who are worried about the separate procedure about TCS apart from TDS.
TCS will be levied on international credit card spending at 20% from July 1.
The exemption had been done and the transit of TCS into TDS deduction will assure ordinary taxpayers to not to see an impact as far as they are concerned.
Chief Economic Advisor has advised that to levy 1 per cent or 5 per cent for easy procedure of tracking.
Overseas medical treatment and education expenses up to Rs 7 lakh a year have been exempted from TCS. Above the amount of Rs. 7 lakh, a 5 per cent levy is charged expenses.
On education loans, the rate of TCS is half percent i.e. 0.5%.