The government has introduced a new tax rule that aims to link Tax Deducted at Source (TDS) with Tax Collected at Source (TCS) for income payment outside TCS.
The objective behind this move is to ensure that the cash flow of individual taxpayers remains unaffected. The announcement comes as a relief for taxpayers who have been grappling with discrepancies between TCS and TDS.
Understanding TCS and TDS:
This development comes at a time when the system of imposing a 20% TCS on spending beyond a specified limit abroad is set to be implemented from July 1.
TCS is typically a tax charged by sellers at the time of selling goods or services, while TDS is a tax imposed by the government.
Exemption for Transactions Up to Rs 7 Lakh:
Chief Economic Advisor (CEO) Ananth Nageswaran has revealed that transactions up to Rs 7 lakh have been exempted from the TCS requirement.
This exemption is aimed at providing relief to small taxpayers, as it means that most transactions will not fall under the purview of the 20% TCS.
Nageswaran has defended this move, explaining that the government is striving to establish a link between TDS and TCS in a manner that if TCS has been paid, it will reflect as a reduced TDS.
With the introduction of this new tax rule, taxpayers can expect a more streamlined and efficient system that brings relief to small taxpayers and minimizes discrepancies between TCS and TDS.
