Through TCS, the government will now collect tax on expenditure as well

- Antenna - Vivek Mehta.

- Efforts to prevent money laundering in the name of sending money abroad: The business of package tour operators will be affected.

Government of India is also trying to increase tax revenue by curbing unaccounted transactions. Yes, the government does not care if the tax payer's misery increases. Finance Minister Nirmala Sitharaman's provision for TCS-tax collection at source in the budget is one such provision. Yes, with effect from July 1, 20 percent more TCS will have to be paid for foreign travel and remittances to relatives and friends living abroad.

A new provision has been introduced through the budget for the year 2023-24, in case a person takes an educational loan from a financial institution and sends a foreign remittance, the amount to be remitted is Rs. If it is more than 7 lakhs, it has been made mandatory to pay 0.5% TCS. Secondly, if someone sends money abroad for education and medical treatment without taking an education loan, in such cases the amount to be sent exceeds Rs.7 lakh, the person who sends it has to deposit TCS at the rate of half of it in the government treasury. Now this limit is not kept.

Abroad Tour Package - 2020 financial bill had 50% TCS on top of full amount and in 2023 it has been directly increased to 20% TCS amount. Let's talk by giving an example.

If you go for a tour package of 1 lakh to Singapore and earlier you were paying 1,05000 with TCS 5% but from 1st July 2023 you have to pay 120,000 to the tour operator. 20,000 will be TCS. Viewed in a way, this is a tax levied on expenditure. The sender is spending the money in it. He has no income. However, 20% TCS will have to be levied on it. This twenty percent amount of TCS which can be availed when the taxpayer files income tax return. The amount spent on the tour is not an income on which income tax is payable but you have to pay an additional amount of Rs 20,000 to claim the refund.

Foreign remittances sent other than for educational and medical purposes

- In 2020, a provision of 5% TCS on the full amount was introduced if the amount goes above 7 lakhs instead of the full amount. It was decided to implement this provision from 1st July 2023. The TCS rate of this has been reduced to 20% in the Finance Bill 2023. Also, the exemption limit of up to 7 lakh rupees has also been removed. Let us make it more clear by giving an example. If I want to send Rs 10 lakh to any of my relatives then I have to pay additional 20% in writing to foreign exchange agency or through bank in the form of TCS. Not only that, suppose I want to take 5000 dollars for shopping in America, then I have to pay 6000 dollars in rupees for 5000 dollars. Which I will get tax relief or refund when I file income tax return.

In this, payments to foreign tour operators and purchase of shopping dollars to travel there will now be 20 percent more expensive and this will also affect the business of tour operators. It will have a direct impact on foreign tour bookings. Besides, businessmen doing import business will also have to pay 20% more amount in remittance from foreign which will have to be claimed later in income tax return.